Crypto news: IMF Chief Warns of Growing Vulnerabilities in U.S. Banking Sector Amid De-Dollarization Trend
Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), has raised concerns about the US banking sector’s vulnerabilities amid a growing de-dollarization trend worldwide.
Speaking at the 2023 Milken Institute Global Conference in Beverly Hills, California, Georgieva noted that the Federal Reserve’s rapid interest rate hikes have exposed weaknesses at some banks, and there may be more vulnerabilities to come.
The latest bank to fail in the US was First Republic Bank, which regulators seized on Monday and sold virtually all of its assets to JPMorgan Chase. This was the largest US bank failure since the 2008 financial crisis.
Georgieva praised US regulators for their swift action in dealing with the collapse of First Republic Bank and emphasized the need for “new regulatory and disclosure thinking” to address the issue.
Georgieva also acknowledged the gradual shift away from the US dollar as the world’s reserve currency, with the euro being the biggest competitor to the dollar.
While she does not see any viable alternative to replace the USD in the near future, she noted that the British pound, the Japanese yen, and the Chinese yuan play a modest role in this trend.
The BRICS nations, including Brazil, Russia, India, China, and South Africa, are among the most significant supporters of de-dollarization. They are working to create a new currency to reduce their reliance on the USD, with a Russian official recently stating that he expects an agreement on a BRICS currency to be reached this year.
Georgieva’s warnings about the US banking sector’s vulnerabilities and the growing trend of de-dollarization have raised concerns in the financial world. It remains to be seen how regulators and governments will respond to these challenges in the coming months and years.