"What has been shown in recent weeks is how Asia is at the center of the global economy and the problems in a market in Asia may indeed spread to the rest of the world," Lagarde told a conference in the Indonesian capital.
The world stock markets and currencies of many emerging markets have experienced large swings since the decision taken by China last month to devalue its currency.
Lagarde said the global econo loan credit insurance my faces headwinds with the rebalancing of China, the slow growth in Japan, commodity prices falling and uncertainty about interest rates in the United States.
Policies need to be tailored to each country, Lagarde said, but mostly involve strengthening defenses with prudent fiscal policy, containment of excessive credit growth, alignment of exchange rates to act as shock absorbers, maintaining adequate foreign exchange reserves and the strengthening of regulations.
"The authorities and supervisors constantly have to rem loan credit insurance ain vigilant, particularly when there are these new and innovative products ... these risks must be under supervision of supervisors," Lagarde said.
Written by Sergio
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