IMF rescue plan fails to soothe markets

September 26, 2023


Image by Stefan

The International Monetary Fund (IMF) has revealed a large and ambitious plan to rescue the fledging Eurozone. However, investors remain unconvinced as markets continue to tumble in early trading.

The plan was announced after the annual meeting of the IMF in Washington DC over the weekend. According to the BBC’s business editor Robert Peston, it involves a 50% write-down of Greece’s government debt and will bring the Eurozone bailout pot up to €2 Trillion (£1.7 trillion).

While the IMF says that the plan should be in place in 5-6 weeks, analysts believe that the practical implication of the plan will be very difficult and many investors doubt that the plan will ever become a reality.

The markets haven’t been very impressed with policymaker’s handling of the Eurozone crisis so far, as they have been a little bit slow in getting things fixed. As a result, the stock markets have been quite volatile. The IMF were hoping that the latest announcement would restore faith in the system, but it looks like actions, rather than words, will be the only thing to quell the markets.

This has been reinforced by the figures in early trading this morning: the French CAC has lost 2% while the FTSE in London and Germany’s Dax have both fallen 1%. Things don’t look any better in Asia, with Japan’s Nikkei falling 2.2% and closing at its lowest point since April 2012. Hong Kong’s Hang Seng and South Korea’s Kospi have also taken a tumble, falling 2.4% and 2.6% respectively.

It seems that only practical action will make the markets less volatile. In the meantime, we’ll simply need to wait until policymakers make a positive move.

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