Posted on September 21, 2011 by iMFdirect
By José Viñals
(Versions in عربي, Français, 日本語, and Русский)
We are back in the danger zone. Since the IMF’s previous Global Financial Stability Report, financial stability risks have increased substantially—reversing some of the progress that had been made over the previous three years.
Several shocks have recently buffeted the global financial system: unequivocal signs of a broader global economic slowdown; fresh market turbulence in the euro area; and the credit downgrade of the United States.
This has thrown us into a crisis of confidence driven by three main factors: weak growth, weak balance sheets, and weak politics. (more…)
Filed under: Economic research, Europe, Financial Crisis, Financial regulation, Financial sector supervision, IMF, International Monetary Fund | Tagged: balance sheet repair, bank balance sheets, capital buffers, confidence, credit risk, deleveraging, financial danger zone, financial stability risk, Global Financial Stability Report, global financial system, household balance sheets, IMF, iMFdirect, International Monetary Fund, sovereign and financial balance sheets, sovereign risks, weak balance sheets | 9 Comments »
Posted on September 13, 2011 by iMFdirect
By Erik Oppers
What drives the investment decisions of investors with a longer time horizon? Our research found these investors generally do not look at differences in interest rates among countries when deciding where to invest.
It turns out the factors they do consider in making these decisions are good and stable growth prospects, low country risks—including political and economic stability—and a stable exchange rate. This all makes good sense for long-term investors such as pension funds and insurance companies.
So why all this talk about how low interest rates in advanced economies are “pushing” investment flows to emerging countries, where interest rates are generally higher—is this story wrong? (more…)
Filed under: Advanced Economies, Emerging Markets, IMF, International Monetary Fund | Tagged: advanced economies, capital flows, carry traders, economic growth, emerging economies, exchange rates, Global Financial Stability Report, hedge funds, institutional investors, insurance companies, interest rates, investors, leveraged investors, market volatility, pension funds, portfolio returns, risks | 2 Comments »
Posted on June 20, 2011 by iMFdirect
By José Viñals
(Versions in عربي, 中文, Español, Français, Русский)
It was fitting that I should present our latest assessment of global financial stability in Sao Paulo, the financial center of one of the leading emerging economies. In common with many of its peers in Latin America, Brazil is recovering strongly from the crisis. But new financial stability challenges are emerging in this, and other fast-growing regions.
Let me start with three key messages:
- First, financial risks have increased since April.
- Second, as a result, policymakers in both advanced and emerging economies need to step up their efforts to preserve financial stability and safeguard the recovery.
- And third, we have entered into a new phase of the crisis – a political phase- when tough political decisions will need to be made, because the window for substantial policy action is closing. Time is of the essence. (more…)
Filed under: Advanced Economies, Emerging Markets, Europe, Financial Crisis, Financial regulation, IMF | Tagged: Brazil, capital flows, debt, emerging economies, Europe, financial policies, financial risks, Global Financial Stability Report, inflation, intereste rates, Japan, Latin America, macropurdential, policymakers, sovereign risk, stress tests, United States | 5 Comments »
Posted on April 14, 2011 by iMFdirect
With global challenges that require global solutions—the theme of the meetings—IMF Managing Director Dominique Strauss-Kahn reminds us that this is “not the time for complacency.”
Government ministers and officials, members of civil society organizations, journalists, and others are flocking to Washington DC this week to discuss and decide on key issues facing the global economy. (more…)
Filed under: Annual Meetings, Civil Society, Economic outlook, Employment, IMF, Inequality, International Monetary Fund, Multilateral Cooperation | Tagged: capital controls, cooperation, Fiscal Monitor, Global Challenges Global Solutions, global economy, Global Financial Stability Report, global financial system, global imbalances, Globalization, IMF-World Bank Spring Meetings, inequality, international monetary system, policy coordination, unemployment, World Economic Outlook | 3 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 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 January 28, 2011 by iMFdirect
Europe’s sovereign debt crisis, fiscal challenges in advanced economies, concerns about overheating in emerging market countries, and the impact of rising food prices. These are the hot topics at this year’s World Economic Forum in Davos, Switzerland, and a clear sign of the tensions and risks as the global economy recovers.
In a video interview from Davos, IMF First Deputy Managing Director John Lipsky tells us that, with the return of global growth, the mood is certainly more optimistic than it was a year or two ago. But there is also a clear sense among delegates that this has not solved some of the world’s important economic problems. (more…)
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Emerging Markets, IMF, International Monetary Fund | Tagged: commodity prices, Europe, fiscal consolidation, Fiscal Monitor, fiscal policy, Global Financial Stability Report, global imbalances, global recovery, inflationary pressures, sovereign debt, World Economic Forum, World Economic Outlook | 3 Comments »
Posted on January 25, 2011 by iMFdirect
By José Viñals
(Version in Español | 中文 | Français | 日本語 | Русский | عربي )
This morning, I presented our latest views on global financial stability in Johannesburg, South Africa.
So, where does the global financial system stand at the moment? Yes, we have witnessed improvements recently, but we are also observing a dichotomy between the economy and the financial system. While the global economic recovery has been continuing, financial stability is still at risk, because of a persistent lack of investor confidence in some advanced country sovereigns and their banking systems.
At this cross-roads, we see three key messages. (more…)
Filed under: Economic Crisis, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: bank capital, bank funding, banking systems, capital flows, credit risks, European Financial Stability Facility, financial crisis, financial stability, financial supervision, fiscal consolidation, Global Financial Stability Report, prudential regulation, public debt, sovereign risk | 2 Comments »
Posted on November 10, 2010 by iMFdirect
By Jeanne Gobat
The breakdown of the short-term funding markets was one of the most striking features of the global financial crisis. Equally astonishing, and unexpected, was the central role that U.S. money market mutual funds played in contributing to this wholesale shut-down.
In our chapter on systemic liquidity risk in the October 2010 Global Financial Stability Report, we describe this aspect of the financial crisis and propose some concrete recommendations on how to fix it. (more…)
Filed under: Advanced Economies, Economic Crisis, Financial Crisis, Financial regulation, Financial sector supervision, IMF, International Monetary Fund | Tagged: asset quality, Financial regulation, Global Financial Stability Report, Lehman Brothers’ bankruptcy, liquidity rules, money market mutual funds, net asset value, repo operations, Reserve Primary Fund, Securities and Exchange Commission, short-term funding markets, systemic liquidity risk, wholesale funding market | 1 Comment »
Posted on October 5, 2010 by iMFdirect
By José Viñals
It would be unfair for any assessment of global economic and financial stability not to acknowledge that tremendous progress has been made in repairing and strengthening the financial system since the onset of the global crisis.
Still, the key message from the IMF’s October 2010 Global Financial Stability Report (GFSR) is clear. Progress toward global financial stability has suffered a setback over the past six months—the financial system remains the Achilles’ heel of the economic recovery. (more…)
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, Financial sector supervision, International Monetary Fund | Tagged: bank restructuring, banking system, capital inflows, debt sustainability, economic recovery, financial reform, Financial regulation, financial sector vulnerabilities, financial supervision, GFSR, Global Financial Stability Report, regulatory reform, sovereign risks | 2 Comments »