International Monetary Fund warned on Wednesday that the growing shortage of safe assets is a new threat to global financial stability.
As the sovereign debt crises have contributed to reduce the number of governments that trust of investors in bonds versions of “risk free”, at which time it paid the new regulations demand for securities “safe” by the banks.
The report issued by the International Foundation how the reforms that followed the financial crisis, the famous between 2007 to 2009 can cause harmful problems the global economy.
“Scarcity of safe assets can lead to more high volatility in the short term, encouraging the adoption of the behavior of the” herd “to affect the sovereign debt.”
The Fund is also “in the future there will be an increase in the demand for safe assets, but few of them would be available and at high prices in international markets.”
It is known that the assets secure a role to play in the financial markets, where it is used the return on government bonds in the evaluation of other assets, while containing the Governor of banks and insurance companies on the bonds with credit ratings are high and which are used as a hedging to support the liquidity and capital in times of crisis, asthey are used as collateral against derivatives and short-term loans.
If there is a shortage of safe assets, this may lead to a worsening financial crisis in the future, especially with the ongoing fragility in the presence of a limited view of them, forcing prices to rise to levels not seen before.
According to the IMF to move the central bank to provide large amounts of those assets or short-term liquidity can contribute to the control of that problem in the foreseeable future, just as did the European Central Bank when providing large amounts of short-term liquidity to banks in the EU.
Fund has set the size of those assets currently including about 74.4 trillion dollars, including gold, corporate debt and government debt, but warned of the disappearance of 16% of the supply in 2016, if governments continued borrowing at current rates that make debt more dangerous.
He called on the Fund to the need for policy makers manage the demand for those assets, and at the same time try to increase the supply.
And demand management, the Fund advised banks to set aside some capital against sovereign debt to avoid creating artificial appetite for government bonds, also called for the accurate implementation of the new rules for the liquidity that can be asked to raise the banks to safe assets over $ 2 to $ 4 trillion.