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Davos: Former IMF chief economist opposed to breaking up big banks
Jan 25, 2012, 12:02 GMT
Davos, Switzerland - Breaking up major lenders is not be an adequate strategy to prevent future financial crises, the former chief economist of the International Monetary Fund said Wednesday at the start of the World Economic Forum in Davos, Switzerland.
Raghuram Rajan acknowledged that big banks had profited from their size in the past, as governments decided they were too big to fail and bailed them out.
But higher capital requirements and improved risk management would be suffient to ensure stability in the banking sector said Rajan, who teaches at the University of Chicago.
German Chancellor Angela Merkel was scheduled to hold the opening keynote address in Davos later on Wednesday.
Looking ahead to the forum, she said earlier this month that developed countries should focus more on sustainable economic growth, by using their financial and natural resources more carefully.
Some 2,600 politicians, business leaders and experts are attending the annual four-day meeting in the mountain resort to discuss the European sovereign debt crisis and its possible effects on the world economy, among other topics.
Activists of the Occupy movement that started last year in New York have set up an igloo camp in Davos to protest against speculative investors and environmental destruction carried out by corporations.
Read more about Davos
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