The International Monetary Fund has just published its September 2011 Financial Monitor. According to the report significant policy challenges remain in advanced, emerging, and low-income economies, and must be faced in an environment where downside risks to growth have increased.
The appropriate pace of adjustment in the short run will depend, for each country, on the intensity of the market pressure it confronts, the magnitude of the risks to growth it faces, and the credibility of its medium-term program.
The euro area needs to sustain fiscal consolidation, minimize its growth fallout, and address concerns about the adequacy of crisis resolution mechanisms. In Japan and the United States, sufficiently detailed and ambitious plans to reduce deficits and debts are needed to prevent credibility from weakening.
The report is available online.