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IMF chief: Loss of small-country bank access risks 'systemic' disruptions 

July 20, 2016

David Lawder and Jonathan Spicer, Reuters

The loss of correspondent banking relationships in developing countries as major banks try to limit risk exposures could marginalize small economies and cause "systemic" disruptions to their financial systems, the head of the International Monetary Fund said on Monday.

IMF Managing Director Christine Lagarde, speaking at the Federal Reserve Bank of New York, said regulators in both major financial center countries and small countries need to do more to help banks maintain these relationships.

"I am concerned that all is not well in this world of small countries with small financial systems," she said. "In fact there is a risk that they become more marginalized."

She said these already have hit a number of Caribbean countries where, as of May, at least 16 banks in five countries have lost all or some of their correspondent banking relationships.

Reuters reported last week that the problem is particularly acute in Belize. Read more

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