Home / Finance & Business / Eurozone CRISIS: EU economy could be WIPED OUT by another financial bubble, IMF warns

Eurozone CRISIS: EU economy could be WIPED OUT by another financial bubble, IMF warns

The eurozone is still at risk from a sting in the tail of the economic meltdown, which pushed banks to the brink of collapse in 2012, accordion to the Washington-based fund.

European lenders still have a number of problems assets – and these could become a big problem for the medium sized banks, the IMF said in its report on Global Financial Stability.

And if debt bubbles were to again burst, it is these firms that are set to suffer the most.

But the IMF does not directly mention a bubble, in what is thought to be an attempt to appease governments and financial institutions.

However, the IMF warns that market risk is increasing, valuations are skyrocketing and the global debt of the private sector is higher than before the crisis.

A current period of calm in markets does not appear to accurately reflect inflation, political, interest rate or growth risks.

The IMF said that if a crisis were to break out, Europe would be hard hit than the United States.

Banks must also be stronger in the event of another crash.

Huge levels of cash from the European Central Bank (ECB) have helped improve the position of lenders in the bloc.

However, the money-printing programme, is thought to be a big risk to medium size banks in countries, including Spain.

But a return to normal policies with higher interest rates could help the banks shore up profits.

For example, even big lenders such as Deutsche Bank have suffered amid ultra low rates from the ECB.

It comes as stock markets in America and parts of Europe head towards record highs.

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