The International Monetary Fund (IMF) has called on the United States to complete reforms promised in the aftermath of the financial crisis.
The Washington-based organisation said one key post-crisis reform, the Dodd Frank Act, must be strengthened as well as protected from legislative proposals to water it down.
Key areas of contention that need to addressed include money market funds, securities lending, the repo markets as well as housing finance.
"US officials have taken major strides to implement the post-crisis reform agenda and move towards a safer financial system, but this work is not yet complete,” said Aditya Narain, an assistant director in the monetary and capital markets department at the IMF.
While the IMF's line is similar to that of the Democratic Party it conflicts with the Republicans on the Senate banking committee who want to see the Dodd Frank Act weakened.
The Dodd Frank Act is the center-piece of the US government's regulatory response to the global financial crisis, which was partly born out of its toxic subprime mortgage market.
Three key financial risks:
- Volatile markets:
"An increase in volatile financial markets—whether during the Fed’s planned increase in interest rates or stemming from a global economic shock—could slow economic growth and trigger investors to withdraw from mutual funds."
- Risky borrowing:
"Low interest rates have led to a build-up in leverage—the use of borrowed money to invest—and are creating risks that impact insurance companies, mutual funds and other nonbanks."
"Cyber attacks, natural disasters, or software and hardware failures could disrupt infrastructure and have a big impact on the financial system."