The International Monetary Fund (IMF) has issued a stark warning to the global economic community, publicly decrying the global financial system as the persevering weak link in the global recovery.

The IMF, the body responsible for international oversight of the financial system, suggested that although the steps taken throughout Europe had been ‘forceful’ and worthy of commendation, the risk posed by the banks to the global recovery was still a significant cause for concern.

Despite major government steps to get worldwide economies back on track, the IMF has warned that there may still remain a series of difficulties within the financial system, and urged governments and central banks to maintain a close watch on their financial sectors as the economy continues to recover.

Fears over the combination of high-debt developed countries and a limp global financial system have led to the IMF’s expression of concern, particularly with the risk of instability in the emerging markets caused by large capital flows from overseas.

With developed economies worldwide showing largely tentative steps towards recovery, the further risks of a faltering financial system appear to be a threat global financial stability can ill afford to ignore.

Last Updated: October 5th, 2010