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During a press conference for the launch of the report this morning, the authors emphasised the need for heavily indebted countries to "strengthen sovereign balance sheets through fiscal consolidation [i.e. deficit reduction] strategies", but acknowledged that premature withdrawal of government support for economies in recession could create additional financial difficulties, and that authorities therefore faced "a difficult balancing act". The report also highlights the uneven progress achieved so far in carrying out financial regulatory reform, three years after the onset of the global financial crisis.



The report recommends that policymakers tackle the following key reforms in order to ensure a viable global financial system and safeguard the recovery:

(1) deal with the legacy problems in the banking sector, including, where necessary, recapitalization;

(2) strengthen the fundamentals of sovereign balance sheets;

(3) continue to clarify and specify regulatory reform, building on the substantial improvements proposed by the Basel Committee on Banking Supervision (BCBS).



The full 200-page publication is available on the IMF's web site: http://www.imf.org/external/pubs/ft/gfsr/2010/02/pdf/text.pdf