In her interview to CNN, the Managing Director (MD) of the International Monetary Fund (IMF) Christine Lagarde stated that it would be better if the restructuring of the Greek debt was done earlier, but this may have put the rest of the Eurozone at risk.
“Based on hindsight, indeed it would have been better to propose earlier (the restructuring of the Greek debt). But the rest of the Eurozone would then be extensively exposed,” Lagarde said adding that “with our choice we wanted first to ensure that Europe has its fireproof wall ready before we do anything serious with the Greek debt.”
Referring to the European economy, IMF head Lagarde stated that the situation is improving and that she expects it to develop in the coming year. After many trimesters of negative development, we see progress for the coming year.”
Lagarde admitted that the international economy still faces important problems, because the financial system is not yet fully arranged. However, she seemed reserved towards the warning of Sheila Bair, former Chairwoman of the U.S. Federal Deposit Insurance Corporation (FDIC), that a new crash is likely to happen.
“Exactly the same thing? I am not sure,” Lagarde replied and added: “However, we can still face big issues as the financial system is not yet arranged as it should be.”
Lagarde stressed there’s work to be done in three sectors: For the banks which are too big to go bankrupt, transparency of the derivatives market, and the regulation and opening of the shadow banking system.