Reply #44: Eurozone debt crisis threatens banks, rest of world: IMF [View All]

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http://economictimes.indiatimes.com/news/international-business/eurozone-debt-crisis-threatens-banks-rest-of-world-imf/articleshow/10055001.cms

BRUSSELS: The eurozone's debt mountain poses a threat to the world economy, the IMF warned on Tuesday, putting pressure on European banks to boost their capital to survive the crisis.

The IMF sounded the alarm in a world economic report that sharply lowered the IMF's growth projections for the 17-nation eurozone to 1.6 percent in 2011 and 1.1 percent in 2012, down from 2.0 percent and 1.7 percent in a June forecast.

"Should the periphery's debt crisis continue to propagate to core euro area economies, there could be significant disruption to global financial stability," the IMF said in its "World Economic Outlook."

European banks are "heavily exposed" to countries facing rising borrowing costs and lenders should make efforts to increase their capital following holes revealed by recent "stress tests" on the sector, the IMF said.