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23 February 2024

Further bank bailouts unlikely

A customer uses an ATM at a Citibank branch in New York. The IMF has warned against expectations of repeat government rescue plans. (EB FILE)


International Monetary Fund Chief Dominique Strauss-Kahn said on Friday bailout-weary governments were not likely to rescue banks if another financial crisis developed.

The former French finance minister said he could not imagine lawmakers in developed countries agreeing to any fresh bank rescues.

"I'm convinced that most parliaments, the Congress here in the United States, the National Assembly in France, Westminster in the UK, others, will be very reluctant, to say the least, to give money again to the financial sector," the IMF chief said at a news conference in Washington organised by the French American Chamber of Commerce on Friday.

"Especially when they see how the financial sector behaves just in the aftermath of the crisis," he added, referring to the continued payment of lavish bonuses blamed for encouraging excessive risk-taking that triggered off the global financial crisis.

Strauss-Kahn stressed the need for new means to address the problems that had spun the global economy into its worst downturn in several decades.

"We have 12 months or 24 months to be able to set up something which would be safer and which would be more likely to resist, avoiding the kind of problem we have just had," he said.

The IMF estimates that the Group of 20 major developed and emerging economies spent more than $1.9 trillion (Dh6.97trn) to support their financial systems between 2008 and August 2009 amid the global crisis.


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