IMF concerned by widespread sovereign debt

Wed, 21 Apr 2010

Identifying Greece as a prime example, the International Monetary Fund has raised their concerns regarding the ever-increasing issue of sovereign debt which is slowly crippling US, Japanese and European economies. One report has commented that the problem could potentially re-ignite yet another 'financial storm'; leading to yet another devastating year for industries, banks, governments and, more importantly, families with debt worries .

The ongoing fear has indeed led to a marked increase in the gamble of attaining sovereigns whilst casting a predicted shadow of debt over countries' financial and economic survival. The IMF's Global Financial Stability report comments: ''Vulnerabilities now increasingly emanate from concerns over the sustainability of governments' balance sheets ." What the IMF is most worried about is the knock-on effect of such a strain on different economies as a result of this widespread sovereign debt .

Though the issue has been identified as an international concern, Europe has been highlighted as one of the greatest risks with a shift from the countries originally in financial trouble: Holland, Austria and Ireland; to the most recent victims of the credit crunch : Portugal, Spain and Greece.

With regard to sovereign debts, the economic state across the globe seems to vary considerably on the financial health and processes of individual banks, with the German-based Landesbanken and savings banks not yet publishing estimated losses; while the Spanish banks are apparently secure enough to survive the impending strain due to Banco de Espana's call for a cautious approach throughout more financially stable periods.
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