Last week’s turmoil in global markets means regulators should focus efforts on action that could prevent cross-market problems instead of paying more attention to certain entities or countries, International Monetary Fund Managing Director Christine Lagarde said.
“We need to move to regulations of activities not entities because it’s not going to be about the banks and it’s not going to be about the insurance,” Lagarde told the World Government Summit in Dubai on Sunday. “We have to anticipate where the next crisis will come from. Will it be the shadow banking? Will it be crypto currencies rising to the sky?”
Asset prices from stocks to oil tumbled last week, with what started as concern the U.S. central bank may raise interest rates more aggressively than previously thought spread from one market to another.
The S&P 500 Index for stocks dropped 5.2 percent in the week, its steepest slide since January 2016, jolting equity markets from an unprecedented stretch of calm. Brent crude plunged 8.4 percent.
“Asset prices have gone up massively, durably and we all agreed at the time that there had to be a market correction,” Lagarde said.