IMF Releases Global Financial Stability Report, Sees $3.6 Trillion In Bank Maturities Over Next Two Years

Tyler Durden's picture

The IMF has released its 2011 Global Financial Stability Report which summarizes the fund's view on the causes for ongoing market instability and proposes some solutions on how to continue. Not surprisingly, the IMF sees the key threat as follows: "The main task facing policymakers in advanced economies is to shift the balance of policies away from reliance on macroeconomic and liquidity support to more structural policies—less “leaning” and more “cleaning” of the financial system. This will entail reducing leverage and restoring market discipline, while avoiding financial or economic disruption during the transition. Thus, ongoing policy efforts to withdraw (implicit) public guarantees and ensure bondholder liability for future losses must build on more rapid progress toward stronger bank balance sheets, ensuring medium-term fiscal sustainability and addressing excessive debt burdens in the private sector."  The key issue here is that as the IMF correctly observes household leverage, still at unsustainable levels, continues to be a threat to the financial system (despite aggressive attempts to transfer leverage from the private to the public sector) and may further weaken banks (but not if one listens to JPM - it's all unicorns and rainbows there). Yet the scariest news: "Global banks face a wall of maturing debt, with $3.6 trillion due to mature over the next two years." But that's ok- these banks will focus on funding US Treasury issuance first, ergo no need for more QE...

Among some of the report findings, which will hardly be deemed shocking:

  • Some stress tests should have higher capital hurdles
  • Some Portuguese banks have low capital levels, and funding costs in Spain and Portugal to rise through 2015
  • Banks in Austria, US and UK have high loan losses (really? that's news to Jamie Dimon et al)

And most importantly:

Global banks face a wall of maturing debt, with $3.6 trillion due to mature over the next two years. Bank debt rollover requirements are most acute for Irish and German banks, from 40 percent to one-half of all debt outstanding is due over the next two years. These bank funding needs coincide with higher sovereign refinancing requirements, heightening competition for scarce funding resources.

It gets worse:

A number of banks in Europe—including nearly all banks in Greece, Ireland, Portugal, many of the small and mid-size Spanish cajas, and some German Landesbanken—have lost cost-effective access to term funding markets. As a result they have turned in varying degrees to repo markets and the ECB for refinancing. But there is still a risk that, in the event of further negative news, a greater number of institutions could face difficulties in rolling over their wholesale funding.

Investor demand for bank debt is falling, reflecting not only underlying vulnerabilities but also changes in the structure of the markets...

Increased wholesale funding costs have, in turn, led some banks to bid for deposits in an attempt to bolster their secure funding base. The fierce competition for deposits, in part due to the excess capacity in banking systems, leaves institutions vying for a limited pool of depositors and in some cases has driven up deposit rates paid in new business.

The rise in the cost of marginal wholesale and deposit funding—along with lower interest income—has led to a squeeze in net interest margins in some economies (Figure 1.11). This has occurred because increases in second-tier bank funding costs have little impact on the benchmark market rates used to price their loans.

In other words, Europe is crippled and soon enough the cost curve will invert, forcing even more banks into the gentle hands of the ECB and the IMF.

Much more in the full report below.


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SheepDog-One's picture

The party's over and time to get busy mopping up all that liquidity all over the walls and floor? Uh oh, I sense the onset of a cranky hangover.

silvertrain's picture

Lets see if they can thread the needle..

Pants McPants's picture

"Global banks face a wall of maturing debt, with $3.6 trillion due to mature over the next two years." But that's ok- these banks will focus on funding US Treasury issuance first, ergo no need for more QE..."

I'm not sure I understand the leap here (forgive my n00biness)

- What happens to the maturing debt if banks first fund UST?

snowball777's picture

I believe their sarcasm was meant to imply default on the $3.6T

snowball777's picture

This will require everyone extricating themselves from the Jenga debt-tower while not triggering the volatile explosives that have been hidden throughout the room...with no lights.

ItsEvolutionBaby's picture



You asshole, i just coughed scotch up all over myself.

umop episdn's picture

That second chart is a perfect example of a tale told by an idiot. Countries are assigned red, green, or yellow with no explanation of what the colors are or how the decisions were made. I guess you are supposed to think of a stoplight and forget that these are banksters with their weapon of choice, ink on paper. LOL!

snowball777's picture

The IMF is like the world's nagging grandma...always telling you not to "spend it all in one place" and encouraging you to "start a piggy bank" with every damn nickel you find. I suppose it must look like herding village idiots to them..."what? you spent more than we talked about again?!".

SheepDog-One's picture

Make no mistake, the IMF's job is to BANKRUPT countries and seize their natural resources, theyre not about 'fiscal responsibility' at all.

snowball777's picture

Reginald never expected his petty ho-slapping and part-time man-whoring to lead him to such a pimportant lifestyle, replete with a stable of fine smooth hos and a baker's dozen of hardwood platinum-tipped pimpcanes.

trav7777's picture

this is the spectre of deflation.  These debts REQUIRE somebody else to borrow ever more...classic ponzi behavior.

These maturities plus interest all have to be borrowed; the consumer isn't holding up his end.  The gov is going to force you to effectively lever by borrowing for you and making you make the payments.

This will run until the economy just totally collapses.  EVERY ponzi scheme eventually collapses and this one is no different.  There is NO WAY for the "system" to live within its means when the debtmoney system is in systemic default at its inception.  Everything that follows is a result of ignorance of this one, basic fact.

carbonmutant's picture

Or the consumer starts to switch to a different monetary system.

Eureka Springs's picture

Dismantle the IMF (International Murder Fund)... bunch of damn Shock Doctors on their best day.

I sincerely do not understand why ZH doesn't ridicule these thugs until they no lobger come up for oxygen more than the Loch Ness monster. Is it because they encourage one world PM currencies?

Alterity's picture

Obama's Teleprompter will resolve this issue at 1:35 EST.  Stay tuned...

RobotTrader's picture

XLF now red.

Call the medics!

treemagnet's picture

IMF just wants one world currency anyway - me too....PMs.

DrStrangelove's picture

One world, two metal order?

Eureka Springs's picture

I've been reading here and elsewhere for a while now, trying to catch up understand the PMers. I only have the means to stock up on long term food, seeds, garden, cold blue steel and lead as my PM... But if your meme is a reflection of most PMers, meaning rule of currency ends up/remains in the hands of IMFers and their ilk... you are much crazier than i dared imagine.

Seriously! Shouldn't we imprison the likes of our criminals in charge and dismantle much... not cede all US sovereignty for gold and silver? Is that really what promotion of PM is about.. a one world currency? Yikes! 

If so, it seems like you just want to hoard, taking a short term upper hand for the promise of a new ponzi, guaranteed to kill countless millions or more instead of taking out the criminals (Banksters, Fed, IMF etc.) once and for all. If you want to repeat a 650 year old ponzi/mistake you should admit it.

DrStrangelove's picture

Global stability... I needed a good laugh.  The IMF provides just the opposite. 

How many coutries up in arms?  How many about to be?  45% of OPEC nations going apeshit...?  Yup.

The Contagion of Outrage...




DrStrangelove's picture

Aww, now I gotta read all that schet.   The IMF gets away with murda.

JollyRoger's picture

The ponzi scheme will continue to be consolidated further towards the top.  We'll be ok in the long run because the galactic federation has already promised manageable terms to fund earth's debt.

DrStrangelove's picture

moon banks will bailout the earth banks...


or the world goes bankrupt

snowball777's picture

That would explain why I just saw Keating and Mozilo float by in spacesuits.

Dick Darlington's picture

Stability report? There must be a typo there. Get ready for Spain going down next in the European ponzi scheme. IMF, EU, ECB and, of course, the banking cartel are spinning the "Spain is not Portugal" -propaganda as hard as they can. Just like they spinned the same bs with Greece, Ireland and Portugal and look what happened. Well duh, Spain is not Portugal, Spain is Spain and Spain is insolvent. That's the long story short so get ready to put Your helmet on for the next round of European debt crisis. I really hope that will be the last round and the euro-plutocrats give up on the raping game of the taxpayers. Yeah, I know, they'll never give up until it's forced on them...

flattrader's picture

Global Financial Stability is about to take a big hit.

Courtesy of our ZH Japanese blogger at

[Who has done an excellent job of keeping us informed.]

Now that the Japanese are starting to acknowledge the obvious [to us at least] and are contemplating widened the exclusion zone, how long before Toyota, Nissan, Sony and any number of chip fab plants find themselves in the circle of hell?

How long before the business press puts this back in the headlines?


Wednesday, April 13, 2011

Japan's Prime Minister Kan: "Evacuation Zone Will Be Uninhabitable"

According to Yomiuri, that's what Kan said to one of his special advisors Kenichi Matsumoto:

Talking about the evacuation zone around the Fukushima I Nuclear Power Plant, Kan said "It will be uninhabitable for a while. For 10 years, maybe 20 years," Matsumoto disclosed to the press.

flattrader's picture

This is un-fucking believable...

Kan also said...

In the press conference of Prime Minister Kan on April 12 (in Japanese), Kan outlined his plan for "recovery and rebuilding" after the earthquake/tsunami on a 1 month (and a day) anniversary of the March 11 earthquake/tsunami; while he did mention the Fukushima I Nuke Plant, it was in the context of "stabilization". He said the government is waiting for TEPCO to submit the prospect of how the whole situation may be resolved. (Good luck with that.)

He concluded his speech by asking the citizens to "buy goods produced in the affected areas, use them, or eat them, and enjoy" so that Japan recovers.

Bicycle Repairman's picture

The Japanese have nothing.  Absolutely nothing.  Unbelievable.

Bansters-in-my- feces's picture


Money Fraudsters..

Just another USA controled group of moetary thugs.

This group needs ripped apart and scrapped

Did YOU elect them...???

rufusbird's picture

The concept of "New World Order" doesn't sound so far fetched anymore...the only thing that will let the Ponzi scheme continue is if it is institutionalized, and centralized, and administered on a global basis.

snowball777's picture

Allow me to be the first to officially opt out of your proposed giant reverse gang-bang.

rufusbird's picture

Actually my original post was going to be>>>The light bulb came on these past couple of days. I had been struggling to buy into the concept of the New World Order. Sounded to Orwellian for me to happen on a global scale trying to encircle us...then It occurred to me that WE are the new world order encircling the rest of the globe...<<< but it sounded too wordy so I tried to make it more brief. Too brief evidently...


Bansters-in-my- feces's picture

THE USA ...IS ...the IMF.

What a fucking joke.

The right hand telling the left hand to behave.


tradewithdave's picture

Time for the U.S. to take a trip to "Uncle Dom's Cabin"...Strauss-Kahn that is.  Bring your down payment money and prepare to take a sovereign whippin'.

Dave Harrison