De Jong thinks it stands to reason that rising interest rates hurt “here and there.” “If you first heavily leverage the entire economy and then raise interest rates, you shouldn’t be surprised if here and there it hurts.” iMG is still and rightfully concerned about this. However, I found the tone of the press conference less alarmist than six months ago,’ says De Jong.
In the IMF’s Stability Report, the institute also discussed the banking crisis caused by the bankruptcy of several banks in the US and the bailout of Credit Suisse. ‘The IMF says these are specific cases of those banks and bad bank policy. That’s not to say there aren’t banks in a similar position.’ For the time being, the crisis appears to have been averted, for which the IMF praises central banks in particular for their ‘resolute action’.
“What is not feasible in a market economy must collapse”
What also helps, according to the economist, are the “higher capital and liquidity reserves”. ‘Banks are simply in a stronger position.’ The fact that the banks are failing is also a good thing, says De Jong. ‘What is not feasible in a market economy must collapse. (…). By constantly bailing out banks that are in trouble, you are also giving perverse incentives to the bank’s management and shareholders. They can encourage unacceptable risk, which means it keeps happening.’
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‘Ordinary taxpayer the victims’
The IMF finds it logical to explain that this time the banks have been bailed out. The IMF says this was done to prevent a chain reaction of failing banks. Because the big problem remains in the banking system that even healthy banks can collapse if there is a crisis of confidence. If you allow it, huge and unnecessary damage will occur. The ordinary taxpayer will be the victim of this.’