Posted on April 21, 2011 by iMFdirect
Finance ministers and central bank governors from around the world, gathering at the Spring Meetings of the IMF and World Bank in Washington last week, identified a slew of continued and emerging risks to the global economy, including higher food and fuel prices, the disaster in Japan, unrest in the Middle East, lingering unemployment in parts of the world, and the risk of overheating in some dynamic emerging markets.
With the recovery solidifying but still fragile, ministers put the spotlight on how to strengthen the IMF’s surveillance—its economic assessment and analysis—to help countries take the action needed to address risks and avoid future crises. (more…)
Filed under: Annual Meetings, Economic Crisis, Financial Crisis, IMF, International Monetary Fund | Tagged: commodity prices, G-20, global financial crisis, IMF surveillance, IMF-World Bank Spring Meetings, International Monetary and Financial Committee, multilateral surveillance, overheating, risks, Tharman Shanmugaratnam, unemployment | 2 Comments »
Posted on April 13, 2011 by iMFdirect
By José Viñals
In various guises, the “Year of Living Dangerously” has been used to describe the global financial crisis, the policy response to the crisis, and its aftermath.
But, we’ve slipped well beyond a year and the financial system is still flirting with danger. Durable financial stability has, so far, proven elusive.
Financial stability risks may have eased, reflecting improvements in the economic outlook and continuing accommodative policies. But those supportive policies—while necessary to restart the economy—have also masked serious, underlying financial vulnerabilities that need to be addressed as quickly as possible. (more…)
Filed under: Advanced Economies, Emerging Markets, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: asset quality, balance sheets, bank credit, bank restructuring, banking system, capital buffers, capital controls, capital inflows, debt sustainability, financial imbalances, financial sector risk, financial stability, global financial crisis, Global Financial Stability Report, government debt, household indebtedness, macroprudential policies, medium-term fiscal consolidation, overheating, sovereign funding | 5 Comments »
Posted on April 8, 2011 by iMFdirect
By José Viñals
When the global financial system was thrown into crisis, many policymakers were shocked to discover a gaping hole in their policy toolkit.
They have since made significant progress in developing macroprudential policy measures aimed at containing system-wide risks in the financial sector. Yet progress has been uneven. Greater efforts are needed to transform this policy patchwork into an effective crisis-prevention toolkit.
Given the enormous economic and human cost of the recent financial debacle, I strongly believe that we cannot afford to miss this opportunity for substantial reform. (more…)
Filed under: Financial Crisis, Financial regulation, Financial sector supervision, G-20, International Monetary Fund | Tagged: capital requirements, credit growth, crisis prevention, financial stability, global financial crisis, global financial system, loan-to-value ratio, macroprudential policies, macroprudential regulation, regulatory arbitrage, systemic risk | 9 Comments »
Posted on April 6, 2011 by iMFdirect
By Jeanne Gobat
The near collapse of the financial system that set off the global crisis was due in part to financial institutions suddenly lacking access to funding markets, and liquidity drying-up across securities markets.
Many financial institutions were unable to roll over or obtain short term funding without sustaining significant losses. This threatened to sink them.
Financial institutions did not factor in how their own responses to a liquidity shortfall could make the entire system shut down and less stable—that is, they underestimated their contribution to systemic liquidity risk in good times, and did not bear the cost of their actions on others in bad times.
It only takes a few institutions to pull the plug on a liquidity-filled bathtub before it runs dry, and the central bank needs to open the spigots again. (more…)
Filed under: Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: Basel III, financial institutions, financial system, funding markets, global financial crisis, Global Financial Stability Report, liquidity conditions, liquidity risk, macroprudential policies, Microprudential regulations, regulatory reform, solvency risk, stress-testing, systemic liquidity risk | 1 Comment »
Posted on April 5, 2011 by iMFdirect
Open, wide-ranging, and balanced discussion. For Olivier Blanchard—and co-hosts David Romer, Michael Spence & Joseph Stiglitz—that was the goal of last month’s conference at the IMF on the future of macroeconomic policies after the global financial crisis. And it is exactly what they got.
The crisis was a wakeup call for theorists and policymakers… Economic models, policy tools, and how they are applied need to catch up with changes in the global economic and financial system.
You’ve heard here about views from the conference, but there’s plenty of discussion going on outside the IMF. Here’s a snapshot…. (more…)
Filed under: Economic research, International Monetary Fund | Tagged: Anders Aslund, David H. Romer, Financial regulation, financial sector risk, global financial crisis, high-frequent trading, Joseph E. Stiglitz, macroeconomic models, Macroeconomic policies, Mark Thoma, Matthew Yglesias, Michael Spence, Olivier Blanchard, Paul Krugman, Perry Mehrling, policy tools, Robert Solow, unemployment | 2 Comments »
Posted on April 4, 2011 by iMFdirect
By Abebe Aemro Selassie
Among the havoc wrought by the global financial crisis, unemployment ranks at the top. This discussion often focuses on the situation in advanced countries. Unemployment in the United States, for example, continues to hover around 9 percent.
Take that and double it. Then you can begin—yes, just begin—to get a sense of the magnitude of the problem in South Africa. Unemployment in South Africa now stands at some 24 percent. Youth unemployment is phenomenally higher still at some 50 percent. (more…)
Filed under: Africa, Economic Crisis, Economic research, Emerging Markets, Employment, Inequality, International Monetary Fund, Politics, Public debt | Tagged: global economic crisis, global financial crisis, labor markets, labor protection laws, macroeconomic policy, private investment, South Africa, unemployment, wage bargaining, wage subsidy, youth unemployment | 7 Comments »
Posted on April 2, 2011 by iMFdirect
There has been plenty of reflection, during the past few years, on the causes of the global financial crisis. But, last month’s conference at the IMF focused on taking what we’ve learned from the crisis and looking toward the future of economic policy.
Robert Solow—Professor Emeritus at Massachusetts Institute of Technology and Nobel Prize winning economist—was among those who brought interesting perspectives and a wealth of experience to the conference discussions.
Watch Professor Solow’s interview and hear more about what he has to say on… (more…)
Filed under: Economic Crisis, Economic research, International Monetary Fund | Tagged: bank credit, economic growth, education, fiscal policy, global economic crisis, global financial crisis, macroeconomic policy, monetary policy, Nobel Prize, public debt, Robert Solow | Leave a Comment »
Posted on October 6, 2010 by iMFdirect
By Olivier Blanchard
Achieving a “strong, balanced, and sustained world recovery”—to quote from the goal set in Pittsburgh by the G-20—was never going to be easy. It requires much more than just going back to business as usual. It requires two fundamental and complex economic rebalancing acts.
First, internal rebalancing. When private demand collapsed, fiscal stimulus helped reduce the fall in output. This helped avoid the worst. But private demand must now become strong enough to take the lead and sustain growth, while fiscal stimulus gives way to fiscal consolidation.
The second is external rebalancing. Many advanced countries, most notably the United States, relied excessively on domestic demand before the crisis, and they must now rely more on net exports. Many emerging market countries, most notably China, had relied excessively on net exports, but must now look to domestic demand. (more…)
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, G-20, growth, Low-income countries, Multilateral Cooperation | Tagged: balanced and sustainable growth, capital inflows, downside risks, economic imbalances, financial reform, fiscal consolidation, Fiscal Stimulus, global financial crisis, IMF World Economic Outlook, monetary accommodation, policy coordination, private domestic demand, private investment, rebalance global economy, sustainable recovery, unemployment | 10 Comments »
Posted on September 23, 2010 by iMFdirect
By John Lipsky
“Never again can we let ourselves be caught unprepared by an economic and financial crisis of such global magnitude.” This was the spirit in which G-20 Finance Ministers in late 2008 tasked the IMF and the newly-formed Financial Stability Board to jointly develop an Early Warning Exercise (EWE), to be ready by the IMF’s 2009 Istanbul Annual Meetings.
The inspiration was clear: In the wake of the September 2008 onset of unprecedented financial turmoil, policymakers recognized that earlier danger signs had not been synthesized into an actionable warning. The EWE was intended to fill the analytical gap: the goal is to produce an effective “call to arms” as threats emerge—but well before crises erupt. (more…)
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, IMF, International Monetary Fund | Tagged: alternative policy scenarios, contingency plans, early warning exercise, financial sector regulation, financial supervision, global economic crisis, global financial crisis, multilateral surveillance, sensitivity analysis, surveillance, tail risks, vulnerabilities, vulnerability analysis | 5 Comments »