A growing trend towards excessive risk-taking and lack of action to repair broken bank balance sheets could trigger a "chronic" new phase in the financial crisis, the International Monetary fund has warned.
The IMF said that while near-term risks had abated in response to loose central bank policies, reforms to repair ailing banks were not yet complete and could pose a threat to future stability, particularly in Europe, the Telegraph reports.
"While major UK and core euro area banks have been actively de-risking and deleveraging . . . more needs to be done to complete the repair of their balance sheets," the IMF said in its half-yearly Global Financial Stability Report.
It came as Jens Weidmann, Germany's central bank chief, warned that Europe could take ten years to recover from the crippling debt crisis.
"Overcoming the crisis and the crisis effects will remain a challenge over the next decade," Mr Weidmann told the Wall Street Journal.
"The calm that we are currently seeing might be treacherous [if countries delay reforms]."
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