[rad-green] IMF Head Gives 'Stark Message' of Looming Inequality-Fueled Global Financial Disaster

*https://www.commondreams.org/news/2020/01/17/imf-head-gives-stark-message-looming-inequality-fueled-global-financial-disaster
<https://www.commondreams.org/news/2020/01/17/imf-head-gives-stark-message-looming-inequality-fueled-global-financial-disaster>Common
Dreams          January 17, 2020IMF Head Gives 'Stark Message' of Looming
Inequality-Fueled Global Financial DisasterFurther fueling the potential
threat are "climate-related shocks."by Andrea Germanos, staff writer*

[image: Managing Director of the International Monetary Fund (IMF)
Kristalina Georgieva speaks on new research on the financial services
sector and its impact on income inequality, in Washington, D.C, on January
17, 2020.]

*Managing Director of the International Monetary Fund (IMF) Kristalina
Georgieva speaks on new research on the financial services sector and its
impact on income inequality, in Washington, D.C, on January 17, 2020.
(Photo: Jim Watson/AFP via Getty Images)*

Increasing inequality and the climate crisis are pushing the world towards
another financial disaster, the International Monetary Fund chief said
Friday—a warning, according to one anti-poverty group, that should be taken
seriously.

IMF managing director Kristalina Georgieva made the remarks in a speech
<https://www.imf.org/en/News/Articles/2020/01/17/sp01172019-the-financial-sector-in-the-2020s>
at
the Peterson Institute for International Economics in Washington, D.C.

A theme of "increasing uncertainty," some of which is driven by inequality,
has already emerged from the new year, Georgieva said.

The trend of rising inequality within countries, she said, "is reminiscent
of the early part of the 20th century, when the twin forces of technology
and integration led to the first Gilded Age, the Roaring Twenties, and,
ultimately, financial disaster."

Unlike the 1920s, however, the new decade is confronted with an urgent
climate crisis.

"In the 2020s," said Georgieva "the financial sector will have to grapple
with preventing the traditional type of crisis, and handle newer ones,
including climate-related shocks. Think of how stranded assets can trigger
unexpected loss. Some estimates suggest the potential costs of devaluing
these assets range from $4 trillion to $20 trillion."

She also pointed to new IMF research showing rising inequality—which her
institution has helped fuel by promoting neoliberal policies—is a predictor
of coming a financial crisis. Staving off that threat includes increasing
affordable and readily available access to financial services to address
inequality, sustaining regulatory mechanisms, and ensuring more stability.
Key to the latter point is addressing the climate crisis.

"The financial sector can play a crucial role in moving the world to net
zero carbon emissions and reach the targets of the Paris Agreement,"
said Georgieva. "To get there, firms will need to better price climate
change impacts in their loans." Institutions will also increase stability
and help lessen inequality by boosting lending to smaller firms, she added.

According to Jubilee USA director Eric LeCompte, it would be unwise to let
Georgieva's comments fall on deaf ears.

"The IMF delivered a stark message about the potential for another massive
financial disaster that we last experienced during the Great Depression,"
said LeCompte, also a United Nations finance expert. "With inequality on
the rise and concerns of stability in the markets, we need to take this
warning seriously."

"Trade problems and climate-driven weather events pose additional risks at
this time," LeCompte added. "It's imperative that we ensure the financial
sector is free of risky behavior and corruption if we want to protect
ourselves from another global financial crisis."

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