Posted on April 15, 2015 by iMFdirect
By José Viñals
(Versions in عربي and Español)
The three main messages from this Global Financial Stability Report are:
- Risks to the global financial system have risen since October and have rotated to parts of the financial system where they are harder to assess and harder to address.
- Advanced economies need to enhance the traction of monetary policies to achieve their goals, while managing undesirable financial side effects of low interest rates.
- To withstand the global crosscurrents of lower oil prices, rising U.S. policy rates, and a stronger dollar, emerging markets must increase the resilience of their financial systems by addressing domestic vulnerabilities.
Let me now discuss these findings in detail.
Filed under: Advanced Economies, Annual Meetings, Asia, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Europe, Financial Crisis, Government, growth, IMF, International Monetary Fund, Reform | Tagged: Africa, Bank of Japan, emerging market, euro area, European Central Bank, financial stability, Global Financial Stability Report, Greece, interest rates, liquidity, Middle East, monetary policy, oil prices, Russia, Ukraine, United States | Leave a comment »
Posted on March 26, 2015 by iMFdirect
By Olivier Blanchard, Atish R. Ghosh, Mahvash S. Qureshi
As with previous crises, the global financial crisis has prompted greater calls for international policy cooperation, but it still remains very much like Nessie, the lovable Loch Ness monster: oft-discussed, seldom seen. To reflect on the obstacles to international policy cooperation, and how to make progress, the IMF recently hosted a panel discussion, Toward a More Cooperative International Monetary System: Perspectives from the Past, Prospects for the Future, with Maurice Obstfeld (CEA; University of Berkley), José Antonio Ocampo (Columbia University), Alexandre Swoboda (The Graduate Institute, Geneva), and Paul Volcker (Former Chairman, Federal Reserve).
Filed under: Economic Crisis, Economic outlook, Economic research, Global Governance, Globalization, growth, IMF, International Monetary Fund, Multilateral Cooperation, Politics, Reform | Tagged: capital flows, exchange rate, G-20, health care, international monetary system, international policy coordination, liquidity, Olivier Blanchard, trade | Leave a comment »
Posted on December 9, 2014 by iMFdirect
By Ratna Sahay and Preya Sharma
You may hear a sigh of relief from emerging market watchers as we approach the end of the year. Yet, against the backdrop of a prolonged period of low interest rates in advanced economies, huge capital flows, and a slowdown in emerging market growth, 2015 promises to keep us all on our toes. Differences in the timing of exit from unconventional monetary policy in advanced economies will have a global impact. The IMF has been keeping a close eye on developments in emerging markets, providing analysis on issues such as how investors’ differentiate between emerging market countries, the impact of volatile markets, and the factors explaining the slowdown in growth.
In a recent paper, we take a look back at what happened before and during the tapering episode to draw out the key lessons for policymakers. Past experience is clear: decisions by major central banks can have sizable global spillovers. Announcements by the U.S. Federal Reserve, in particular, have been strongly correlated with asset price volatility and capital flows in emerging markets. With expectations of Fed tightening to begin in 2015, we think a better understanding of these events can better inform policymakers’ decisions.
Filed under: Advanced Economies, Economic research, Emerging Markets, Financial Crisis, Government, growth, IMF, International Monetary Fund, Politics | Tagged: capital flows, central banks, emerging market, financial market, liquidity, market volatility, monetary policy, U.S. Fed, unconventional monetary policy | Leave a comment »
Posted on October 15, 2014 by iMFdirect
By Fabio Cortes, David Jones and Evan Papageorgiou
Low interest rates and other central bank policies in the United States have sent investors looking for higher returns on their investments. Money is pouring into mutual funds and exchange-traded funds, which is fueling a mispricing of credit and a build-up of risks to liquidity in the markets—the ability to trade in assets of any size, at any time, and to find a ready buyer.
Mutual funds and exchange-trade funds are the largest owners of U.S. corporate and foreign bonds (Chart 1). This means they provide a lot of credit to grease the wheels of the financial system because they have taken investors’ money and lent it to corporates.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, IMF, International Monetary Fund, Reform | Tagged: central bank, exchange-traded funds, Global Financial Stability Report, liquidity, liquidity mismatch, monetary policy, money market mutual funds, United States | Leave a comment »
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 April 2, 2013 by iMFdirect
By Robert Tchaidze and Heiko Hesse
In mid 2010 the Turkish central bank decided to introduce a policy that increased uncertainty in interest rates hoping that would stop foreign investors who were pouring money into the country in search of a quick buck. That’s right. ‘Keep calm and carry on’ was replaced by ‘Keep them guessing.’
The Turkish economy was overheating. Money poured into the country from foreign investors attracted by a strong economy and high yields. A lending boom resulted in excessive growth along with an appreciating exchange rate and widening current account deficit. While evidence of success, these kinds of capital inflows are a headache policymakers would rather avoid, as they expose a country to risks that affect the economy and financial system as a whole, while undermining the objective of controlling inflation.
Filed under: Advanced Economies, Economic research, Employment, Europe, Finance, Fiscal policy, growth, International Monetary Fund | Tagged: central banks, exchange rate, GDP, IMF, iMFdirect, inflation, interest rates, International Monetary Fund, liquidity, macroprudential, monetary policy, Turkey | 1 Comment »
Posted on February 25, 2013 by iMFdirect
by José Viñals
Version in Español
It is still winter in the northern hemisphere, but there is never a bad time for spring cleaning. I suggest that policymakers de-clutter their to-do lists by focusing on three priorities.
These policies will help economies grow and will significantly improve financial and monetary stability in 2013 and beyond.
Filed under: Advanced Economies, Europe, Finance, Financial Crisis, Financial regulation, growth, IMF, International Monetary Fund, Politics | Tagged: banks, Basel III, iMFdirect blog, liquidity, macroprudential, to=do list, Vinals | Leave a comment »