Lipton, the first vice president of the International Monetary Fund (IMF), said Monday that the trade war between the United States and China poses the greatest risk to global stability and that Europe needs fiscal stability to cope with economic shocks.
"Obviously, it's not just Europe's own problem. The United States also needs orderly finances. Trade tensions between China and the United States pose the greatest risk to global stability, "Lipton said at a conference in Lisbon.
The trade disputes that began eight months ago have affected billions of dollars in merchandise trade between China and the United States.
Lipton said he believed that the core of risk reduction in Europe must be to stabilize fiscal capacity, which is essential to "cope with macroeconomic shocks and improve fiscal-monetary policy mix".
"Without this capability, the euro zone is likely to rely too heavily on monetary policy to maintain stability, and the burden of dealing with the crisis will fall too heavily on individual countries, whose ability to cope depends on their fiscal space."
Lipton said that Britain's withdrawal from Europe also brought uncertainty to Europe and other regions.
Regarding the recent slowdown in economic growth in Europe, Lipton said that every member of the EU should "strengthen its defense before a potential economic downturn comes", including those countries that have not yet solved their "obvious weaknesses", especially Italy.
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