BEVERLY HILLS, California: International Monetary Fund Managing Director Kristalina Georgieva said on Monday she expects more weaknesses to be exposed in the banking sector, only hours after First Republic Bank was rescued by JPMorgan Chase .
She said the quick transition from low to much higher interest rates played a role in uncovering weaknesses at certain banks and added that the pain may not be over. The IMF welcomed quick action by US regulators to seize First Republic and find a buyer, but noted that the resilience of the global financial system continued to be tested, with strains evident across a number of institutions and markets.
The IMF last month trimmed its 2023 global growth outlook slightly as higher interest rates cooled activity but warned that a severe flare-up of financial system turmoil could slash output to near-recessionary levels.