Christine Lagarde on Turkish Markets, Global Banking and Politics

By: Bloomberg

In an exclusive interview with Bloomberg Television’s Tom Keene, IMF Managing Director Christine Lagarde discusses a range of issues including Turkish markets, the challenges around global banking and money laundering, the Italian bank crisis and political turmoil on both sides of the Atlantic.

On Turkish Markets:

- Lagarde says Turkish monetary authorities “have all reacted very strongly, in a very concerted way” to make sure there would be liquidity available and banks could function.

- Says the market reaction to Friday’s attempted military coup has been moderate and that financial markets have functioned in an “orderly” manner

- “The lira went down a little bit but not by much.”

On Challenges of Global Banking and Money Laundering:
- “If we have more banks withdrawing activities, the big banks leave those territories open third party activities and funny ways of channeling money around. It’s a risk for the entire community,” referencing the Caribbean Islands, Pacific Islands, Mexico, Philippines and Colombia.

- “It takes three to tango,” she says referencing the countries at risk, the regulators and the banking industry. “We are advocating for these three to get to together to understand the needs of each of the three. Each of the three has to do something.”

On Italian Bank Crisis:

- Says she would not compare the situation of Italy to that of Greece and says “by a long way” the nations have different fundamentals.

On Political Turmoil:
- “I fear from any candidate, anywhere in the world, this withdrawal behind borders, this focus on domestic markets issues exclusively, this turning of the back to globalization issues and global problems. We are in this together.”

Story

Lagarde Says Markets Calmed by Turkish Moves After Coup Attempt

IMF chief says central bank, others acted ‘very strongly’

Markets orderly after ‘massively disorderly’ event, she says

By Andrew Mayeda

(Bloomberg) -- IMF Managing Director Christine Lagarde said quick action by Turkey’s central bank and other agencies has helped calm financial markets after an attempt by members of the military to unseat President Recep Tayyip Erdogan.

“Over the weekend, all of us were on alert, monitoring the situation, wondering if they would take the right measures,” Lagarde said in an interview Monday with Bloomberg Television’s Tom Keene. Turkish authorities including the nation’s central bank and financial authorities “have all reacted very strongly, in a concerted way, in order to make sure that there would be liquidity available, that the banks would function.”

In an effort to quell investor concern, Turkish policy makers said Sunday they will provide unlimited liquidity to banks and would support the lira by removing limits on foreign-currency deposits that commercial lenders are allowed to use as collateral.

Market reaction to the attempted coup has been moderate, with the Turkish lira not getting hit as much as expected, Lagarde said. “In the main, there was an orderly functioning of the markets after something that was massively disorderly.”

Lagarde, head of the Washington-based International Monetary Fund since 2011, commented on Turkey after a speech at the Federal Reserve Bank of New York in which she warned that small countries are in danger of being cut off from the global financial system as big banks withdraw from those nations to reduce risk.

bloomberg.com

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