The International Monetary Fund is closely monitoring recent events in the world's emerging markets amid concerns that the withdrawal of monetary stimulus by the US will add to the turmoil caused by the sudden slump in Argentina . The IMF believes that the next phase of the gradual removal of stimulus to the US economy by the Federal Reserve, due later this week, could be the trigger for fresh turbulence in countries seen as vulnerable to capital flight, such as Turkey and Indonesia . Christine Lagarde , managing director of the IMF, told participants at the World Economic Forum in Davos that the so-called tapering by the US central bank was a potential problem. "This is clearly a new risk on the horizon and it needs to be closely watched," Lagarde said. "How tapering takes place, at what speed, how it is communicated and what spillover effects it has, particularly in emerging markets." Markets sold off on Friday after the Argentinian peso had its biggest one-day fall since 2002. The governor of the Bank of England , Mark Carney , said the UK economy was one-fifth smaller than had the "great recession" of 2008-09 never happened. He said stronger banks and less indebted consumers meant the UK was now in better shape, but listed an array of weaknesses that would inhibit the Bank raising interest rates. He said UK banks might need to build up their defences against further problems.
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