IMF asserts need for banks to raise capital in face of mounting risk

The International Monetary Fund is pressing European banks to raise larger troves of capital to insure against financial instability across world markets. Officials argue that the risk associated with allowing banks to cut back on lending is too great to permit. "Risks to banks and financial markets have increased in recent months, the global lending organization said," The Associated Press reports. "The European debt crisis is affecting its banking system to the point where banks may pull back on lending to conserve cash, which threatens to worsen growth in the region." In recent months, concerns over Europe's sovereign debt crises have begun to enter the political realm. Still, the inability of leaders to reach a long-term solution has threatened to toss markets into turmoil and possibly even recession. Many economists, such as New York Times columnist Paul Krugman, have argued that the European crisis can be delineated to a matter of balance. Officials need to find a way to stave off the risk of sovereign bond investments against a unified currency - the euro. Nonetheless, the IMF recently warned that the legislative and economic options available to European leaders are rapidly dwindling.