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Michael Pettis, industry influencer, comments that persistent and deep financial imbalances tend to cause increasing fragility within financial systems.
He highlights an argument that adjustments to such imbalances must be managed proactively or they will eventually occur in a far more disruptive way. Pettis suggests that disruptive outcomes may be more likely if the necessary steps are not taken.
Pettis previously noted that the IMF has urged countries to address domestic imbalances on their own, even in the absence of policy coordination (read more). Recent commentary builds on earlier concerns about the risks posed by unresolved financial distortions. The IMF's position aligns with calls for timely national action to mitigate potential disruptions.