Lagarde plays down €200bn capital scare

City A.M. Reporter
INTERNATIONAL Monetary Fund (IMF) managing director Christine Lagarde has played down reports that a draft IMF document showed a €200bn (£172bn) shortfall in European banks’ capital.

Lagarde (right) said the reports were misleading and that the international bailout fund was still finalising its study.

“There has been misreporting about the €200bn, this number is tentative,” Lagarde told a news conference after G7 and G8 finance talks in the southern French city of Marseille.

“This is not a stress test that the IMF conducts nor is it the global capital need for European banking institutions, that it is not, and we are currently in discussions with our European partners to assess the global methodology until we reach a tentative draft. It will be published before the end of September.”

Meanwhile, some analysts have suggested that the euro and growth-linked currencies may fall today, hit by a lack of concrete measures from G7 finance chiefs to address either faltering growth, the escalating Eurozone debt crisis, or recent exchange rate volatility.

Finance ministers and central bankers from the Group of Seven industrialised nations pledged to respond in a concerted matter to a global slowdown. However, they offered no specific steps and differed in emphasis on Europe’s debt crisis.