With Russia’s conflict with Ukraine and recent strains on the U.S. and global financial institutions, U.S. Treasury Secretary Janet Yellen said she remained sensitive to downside threats to the world economy.
Yellen said energy and food prices have stabilized, and supply chain constraints were easing, making the global economy healthier than expected. She said a Russian oil price limit stabilized global energy markets while lowering Russia’s main revenue source.
At opening a week of IMF and World Bank meetings, Yellen said the U.S. job market was robust, but inflation was too high, even if prices had eased.
She noted the 2008 financial crisis reforms strengthened the global financial system, including the U.S. banking sector, which has strong capital and liquidity.
After Silicon Valley Bank and Signature Bank failed, the U.S. government enacted emergency measures to supervise mid-sized banks without congressional permission.
“We still monitor negative threats,” she added.
She said Treasury would cooperate with the Financial Stability Board and Basel Council on Banking Supervision to address nonbank financial institution risks.
With more than half of low-income nations closed or in debt difficulty, Yellen urged international debt restructuring reform.
She was heartened that China, the world’s largest sovereign creditor, had promised to offer precise and credible funding assurances for Sri Lanka but said China and all of Sri Lanka’s creditors needed to deliver. Yellen also urged Zambia’s debt treatment and Ghana’s creditor committee to be completed quickly.
Yellen said she would encourage international allies to back Ukraine as it fights Russia and to keep pressuring Moscow to cease the war through sanctions and other measures.
“During the last year, our work has methodically weakened Russia’s military-industrial complex and helped diminish Russia’s war earnings,” she added. Our objective this year is to undermine Russia’s sanctions evasion.
Washington’s three-pronged strategy comprises increasing intelligence sharing and coordination among partners, pressuring firms and jurisdictions that help Moscow dodge sanctions, and closing particular routes Russia uses to equip and support its military.
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