October 5, 2011
The International Monetary Fund has called for a swift recapitalisation of Europe’s banks to stabilise markets and prevent the economy from sliding into recession.
Antonio Borges, the IMF’s Europe director, estimated the cost of such a move at €100bn to €200bn ($265bn) as he sketched out an increasingly dire economic forecast for the continent.
With their own access to funds in question, European banks were retrenching en masse, according to Mr Borges. The cumulative effect was a sharp slowdown in economic activity since the second quarter.
“The situation today is quite difficult,” he said, adding: “We have to restore confidence quickly. The best way to do that is to have a capital increase rather quickly.”
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