WASHINGTON— The International Monetary Fund says the global financial system is more vulnerable than at any point since the 2008 financial crisis.
The global lending organization says risks to banks and financial markets have increased in recent months. The European debt crisis is affecting its banking system to the point where banks may pull back on lending to conserve cash, which threatens to worsen growth in the region.
Meanwhile, there are growing doubts that the U.S. lawmakers can forge the political consensus needed to reduce its growing budget deficits.
European leaders need to quickly implement an agreement reached in July that provides the region’s bailout fund with more flexibility. The U.S. and Japan, meanwhile, must begin to phase in steps to substantially reduce their deficits.