Lagarde continues to kick dirt at European banks.

The IMF estimates European banks have an additional €300 billion at risk due to the European debt crisis, including declines in asset prices and the rise in funding costs.

  • Financial stability risks have increased ‘substantially’
  • Could spread to emerging markets
  • Could reduce EM banking balance sheets by 6%
  • Coherent strategy needed to prevent contagion
  • Public funds may be necessary