Credit levels will need to double over the next 10 years, growing by US$ 103 trillion, to support consensus-projected economic growth. This doubling of credit could be achieved without increasing the risk of major crisis, finds More Credit with Fewer Crises: Responsibly Meeting the World’s Growing Demand for Credit, a report released by the World Economic Forum in collaboration with McKinsey & Company. The study develops a detailed global credit model using historical credit volumes and forecasting potential credit demand to 2020...
In the aftermath of the global recovery attention is focusing on how to ensure greater stability amid concern about the susceptibility of some banks to ongoing turmoil and after-shocks in the financial markets.
As banks repair their balance sheets and deal with huge writedowns concerns remain that with markets still reluctant to support leverage the severely diminished flow of credit may undermine a global recovery.
It is accepted that the credit recovery will be slow and that policy moves by lawmakers may be required to address credit constraints. The International Monetary Fund has warned during 2010 of the continued risks to global recovery and said that concerns about European government bonds could prompt another banking crisis.
"Financial sector risks are not confined to European banks," the IMF said. "The recent turmoil has again demonstrated the susceptibility of banks worldwide to runs on wholesale funding," it added.