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Trump reforms may increase financial risks – IMF

The International Monetary Fund warned that the reduction of the profit tax and the easing of financial regulation measures, planned by U.S. President Donald Trump, could lead to financial risk-taking similar to that preceded the 2008 crisis.

Cash inflow, caused by the tax reform, can be directed mainly to sectors that were involved in activities with significant financial risk, according to semi-annual Global Financial Stability Report. Such risk taking is associated with periodic large destabilizing fluctuations in the financial system over the past several decades.

The IMF also said that Trump administration's measures to protect its own market could be a source of threat for emerging markets as surely as possibility of a faster than expected U.S. interest rates hike.

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