The International Monetary Fund urged European policymakers to deepen the financial and fiscal ties within the euro area with some urgency to restore sagging confidence in the global financial system. In its semi-annual check on the world’s financial health, the Fund said the euro area’s debt crisis was a key threat and the risks to global financial stability had risen in the last six months leaving confidence “very fragile”. The euro area’s plodding progress means European banks are likely to offload $2.8 trillion in assets over two years to reduce their risk exposure, an increase of $200 billion from a prediction six months ago, the IMF estimated. “Despite many important steps already taken by policymakers, this agenda remains critically incomplete, exposing the euro area to a downward spiral of capital flight, breakup fears and economic decline,” the IMF said in its GFSR released on Wednesday.
