Why is IMF silent about the fact that bank regulators, slowly but surely, are causing the economies to stagnate?

Sir, Shawn Donnan, Chris Giles and Gabriel Wildau report that “IMF calls for global action to lift demand as China exports fall” March 9.

With the credit risk weighted capital requirements for banks that allow banks to leverage more their equity with what is ex ante perceived as safe than with was is perceived as risky, banks earn higher expected risk adjusted returns on equity on what is “safe” than on what is “risky”. And as a consequence “risky” SMEs and entreprenuers do not have adequate access to bank credit. And that, slowly but surely, must cause the economy to stagnate. There’s no doubt about that.

When you stress test banks, the most important issue could be what is not on banks’ balance sheets.

IMF’s David Lipton warns the global economy is “clearly at a delicate juncture” and that “Now is the time to decisively support economic activity and put the global economy on a sounder footing,”.

And so I ask again: Why does IMF insist on keeping silence on the odious regulatory distortion of the allocation of bank credit to the real economy?

Mme Christine Lagarde: Ask!

@PerKurowski ©