IMF’s Georgieva: Russian default no longer 'improbable', but no trigger for global financial crisis
|International Monetary Fund Managing Director Kristalina Georgieva crossed wires, via CBS's "Face the Nation" program during the weekend while saying, “Russia may default on its debts in the wake of unprecedented sanctions over its invasion of Ukraine, but that would not trigger a global financial crisis,” per Reuters.
Key quotes
Sanctions imposed by the United States and other democracies were already having a "severe" impact on the Russian economy and would trigger a deep recession there this year.
The war and the sanctions would also have significant spillover effects on neighboring countries that depended on Russian energy supplies, and had already resulted in a wave of refugees compared to that seen during World War Two.
The sanctions were also limiting Russia's ability to access its resources and service its debts, which meant a default was no longer viewed as ‘improbable’.
Asked if such a default could trigger a financial crisis around the world, she said, ‘For now, no.’
The total exposure of banks to Russia amounted to around $120 billion, an amount that while not insignificant, was ‘not systemically relevant.’
Georgieva last week said the IMF would downgrade its previous forecast for 4.4% global economic growth in 2022 as a result of the war, but said the overall trajectory remained positive.
Market implications
The news adds to the recent positive progress on the Ukraine-Russia peace talks and can help build the market’s risk-on mood during early week trading.
Read: Russia and Ukraine give brightest assessment yet of progress in talks on war
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.