WASHINGTON May 16 Central banks got it right
when they saved the world economy, but their unprecedented
actions risk disruptive cross-border spillovers and potentially
heavy losses when the time comes to exit, the IMF said on
In the most detailed survey so far of the dramatic measures
undertaken to counter the 2007-2009 global financial crisis, the
International Monetary Fund broadly repeated earlier assessments
that the steps had worked, but face diminishing returns.
However, in new work undertaken to answer a question that
remains controversial in many countries, including the United
States where the Federal Reserve was in the eye of the storm, it
also outlined scenarios where losses on exit could be severe.
But it reserved its toughest language for politicians who
fail to make use of the breathing space won by ultra-easy policy
after interest rates were slashed in nations including the
United States, Japan and Britain and in the euro zone.
"A key concern is that monetary policy is called on to do
too much, and that the breathing space it offers is not used to
engage in needed fiscal, structural, and financial sector
reforms," the IMF said in the report.
"These reforms are essential to ensuring macroeconomic
stability and entrenching the recovery, eventually allowing for
the unwinding of unconventional monetary policies," it said.