Posted on October 8, 2014 by iMFdirect
By José Viñals
(Versions in Español, 中文)
I have three key messages for you today:
1. Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges.
2. Banks are safer but may not be strong enough to vigorously support the recovery. And risks are shifting to the shadow banking system in the form of rising market and liquidity risks. If left unaddressed, these risks could compromise global financial stability.
3. In order to address this new global imbalance, we must promote economic risk-taking by improving the transmission of monetary policy to the real economy. And we must address financial excesses through better micro- and macroprudential policies.
Filed under: Advanced Economies, Asia, Emerging Markets, Europe, Finance, Financial Crisis, IMF, International Monetary Fund, Investment, Politics, Reform | Tagged: bank credit, banking sector, economic recovery, Europe, GFSR, Global Financial Stability Report, Japan, José Viñals, liquidity, macroprudential policies, monetary policy, shadow banking, United States | Leave a comment »
Posted on October 3, 2014 by iMFdirect
By Gaston Gelos and Nico Valckx
Shadow banking has grown by leaps and bounds around the world in the last decade. It is now worth over $70 trillion. We take a closer look at what has driven this growth to help countries figure out what policies to use to minimize the risks involved.
In our analysis, we’ve found that shadow banks are both a boon and a bane for countries. Many people are worried about institutions that provide credit intermediation, borrow and lend money like banks, but are not regulated like them and lack a formal safety net. The largest shadow banking markets are in the United States and Europe, but in emerging markets, they have also expanded very rapidly, albeit from a low base.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, growth, International Monetary Fund, Investment, Politics | Tagged: banks, euro area, Financial Stability Board, GFSR, Global Financial Stability Report, interest rates, investment, shadow banking, United States | Leave a comment »
Posted on September 22, 2014 by iMFdirect
Lurking conjures up images of spies, flashers and other dodgy types. The IMF’s chief economist Olivier Blanchard takes readers into the dark corners of the financial crisis in his latest article ‘Where Danger Lurks’ in our recent issue of Finance & Development Magazine, and looks at small shocks, sudden stops and liquidity.
Filed under: Advanced Economies, Economic outlook, Emerging Markets, Employment, Europe, Financial Crisis, Globalization, IMF, International Monetary Fund, Politics | Tagged: central banks, Finance & Development magazine, financial crisis, global economy, macroeconomic policy, Olivier Blanchard, United States | Leave a comment »
Posted on September 17, 2014 by iMFdirect
By Ian Parry
The time has come to end hand wringing on climate strategy, particularly controlling carbon dioxide (CO2) emissions. We need an approach that builds on national self-interest and spurs a race to the top in low-carbon energy solutions. Our findings here at the IMF—that carbon pricing is practical, raises revenue that permits tax reductions in other areas, and is often in countries’ own interests—should strike a chord at the United Nations Climate Summit in New York next week. Let me explain how.
Ever since the 1992 Earth Summit, policymakers have struggled to agree on an international regime for controlling emissions, but with limited success. Presently, only around 12 percent of global emissions are covered by pricing programs, such as taxes on the carbon content of fossil fuels or permit trading programs that put a price on emissions. Reducing CO2 emissions is widely seen as a classic “free-rider” problem. Why should an individual country suffer the cost of cutting its emissions when the benefits largely accrue to other countries and, given the long life of emissions and the gradual adjustment of the climate system, future generations?
Filed under: Advanced Economies, Economic research, Global Governance, Globalization, IMF, International Monetary Fund, Politics, Reform | Tagged: Australia, carbon pricing, carbon tax, China, Climate change, CO2 emissions, energy taxes, environment, European Union, fossil fuels, Poland, United States | Leave a comment »
Posted on July 29, 2014 by iMFdirect
By Hamid Faruqee
(Version in Español)
Global interest rates will eventually move higher. We do not know precisely when, how fast, or how far, but we do know the direction. After a long period of very low interest rates following the global financial crisis, some central banks (mainly, the U.S. Federal Reserve and the Bank of England) are planning to “normalize”—that is, to gradually tighten their easy monetary policies as their economies improve. And when U.S. and U.K benchmark interest rates go up, interest rates tend to go up elsewhere, too.
So should we worry if and when global financial conditions tighten?
The 2014 IMF Spillover Report prepared by IMF staff looks into this important issue—what to watch out for and who to watch out for as interest rates begin to normalize. The answer depends on two sets of factors. First, what is going on in the originating source countries in terms of the underlying drivers behind higher yields—for example, whether or not stronger growth, say in the U.S. and U.K., is the main force behind higher interest rates. Second, what is going on in the receiving countries—that is, how vulnerable they might be to higher borrowing costs. Both these factors matter for spillovers as highlighted in the report.
Filed under: Advanced Economies, Economic outlook, Economic research, Emerging Markets, Europe, Financial Crisis, Financial regulation, growth, IMF, International Monetary Fund, Politics | Tagged: Bank of England, inflation, interest rates, spillover effects, spillover reports, Tapering, U.S. Fed, United States Federal Reserve | Leave a comment »
Posted on April 30, 2014 by iMFdirect
By Reza Moghadam
(Version in Русский and Español)
Even before geopolitical tensions unleashed currency flight, bank deposit withdrawals and surging risk premiums, Ukraine faced serious challenges. The crisis there has been years in the making, reflecting deep structural problems that left it vulnerable to periodic funding shortfalls and near the bottom of transition country league tables. Thus, any program to tackle the immediate crisis in Ukraine must inevitably come to grips with this legacy.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Europe, Financial Crisis, Fiscal policy, growth, IMF, International Monetary Fund, Politics | Tagged: energy, euro area, exchange rate flexibility, fiscal policy, Russia, transparency, Ukraine | Leave a comment »
Posted on April 14, 2014 by iMFdirect
By IMFdirect editors
Socrates’ famous method to develop his students’ intellect was to question them relentlessly in an unending search for contradictions and the truth—or at the very least, a great quote.
The method was alive and well among the moderators, panelists and audiences of the IMF’s Spring Meetings seminars that took place alongside official discussions, where boosting high-quality growth, with a focus on the medium term, was at the top of the agenda. Our editors fanned out and found a couple of big themes kept coming up. Here are some of the highlights.
Lots of people are talking about what happens when the flood of easy money into emerging markets thanks to low interest rates in advanced economies like the United States slows even more than it has in the past year.
At a seminar on fiscal policy the discussion focused on the challenges facing policymakers as central banks slowly exit from unconventional monetary policy and interest rates begin rising.
A live poll of the audience found 63 percent said the global economy remains weak and unconventional monetary policies should remain in place.
Filed under: Advanced Economies, Africa, Annual Meetings, Asia, Economic outlook, Emerging Markets, Financial Crisis, Fiscal policy, Globalization, IMF, Inequality, International Monetary Fund, Politics, Public debt | Tagged: Chile, Christine Lagarde, emerging market, Federal Reserve, global economy, growth, income inequality, macroprudential policies, Olivier Blanchard, Oxfam, Program of Seminars, Reserve Bank of India, Spring Meetings, United Kingdom | 1 Comment »