IMF, the “bold” action needed is not for “to contain risk”, but for to contain bank regulators’ silly risk aversion.

Sir, I refer to Shawn Donnan’s “IMF urges top economies to join forces in growth push” February 25.

In it IMF is quoted warning: “global market turbulence is starting to hurt the real economy…These developments point to higher risks of a derailed recovery, at a moment when the global economy is highly vulnerable to adverse shocks”

But again, as has been the case for the last decade, IMF says not one word that what really derailed the economy, and now impedes it from getting back on rails, were the distortions in the allocation of credit to the real economy, produced by the risk weighted capital requirements for banks.

And IMF opines: “The global economy needs bold multilateral actions to boost growth and contain risk.”

NO! The “bold” action most needed is not to “contain risk” but to get rid of that silly risk aversion that, around the world, over the last decade, has perhaps impeded millions of bank loans to SMEs and entrepreneurs. 

@PerKurowski ©