IMF: Rate hikes are eroding trust in financial institutions

Some were left ‘unprepared’

The International Monetary Fund has warned the global financial system is showing “considerable strains” caused by rising interest rates, which is damaging trust in financial institutions.

The banking turmoil in March caused by the collapse of Silicon Valley Bank, Signature Bank, and the sale of Credit Suisse to UBS has "rocked market confidence". According to Tobias Adrian, financial counsellor and director of the IMF's monetary and capital markets department, this demonstrates the heightened risks increased interest rates cause for banks and non-bank financial intermediaries. Although hikes have targeted inflationary spikes, he highlighted this type of intervention is "often followed by stress that exposes fault lines in the financial system". IMF: UK economy to sh...