The global financial system and the world economy are slowly regaining their health, thanks in large part to unprecedented interventions by governments, but the sharp rise in government debt during the economic crisis from already elevated levels has helped create what the IMF says is the newest threat to the world financial system: growing sovereign risk. The Fund says that that is not to say that the private financial sector is fully recovered. The recovery in the financial sector remains “fragile,” according to José Viñals, Financial Counselor and Director of the IMF’s Monetary and Capital Markets Department. The IMF says Western banks are due to have further bank writedowns of $800bn.