Posted on March 23, 2012 by iMFdirect
José Viñals (l) and Nicolás Eyzaguirre
By José Viñals and Nicolás Eyzaguirre
(Version in Español)
Just a few years ago, “Macro…, what?!” would have been a typical reaction to hearing the technical term that today is the talk of the town among financial regulators.
But in the aftermath of the global financial crisis, macroprudential policy—which seeks to contain systemic risks in the financial system—has indeed come to be an important part of the overall policy toolkit to preserve economic stability and sustain growth.
For example, a number of countries, especially emerging markets, have been relying on macroprudential policies (such as loan-to-value or debt-to-income ratios, or countercyclical loan loss provisions) to rein in rapid credit growth, which—if unchecked—could destabilize the financial system and, ultimately, bring about a recession and drive up unemployment.
Filed under: Advanced Economies, Africa, Asia, Debt Relief, Economic Crisis, Economic research, Emerging Markets, Europe, Finance, Financial Crisis, Financial regulation, Fiscal policy, growth, IMF, International Monetary Fund, Latin America, Middle East, Multilateral Cooperation | Tagged: financial stability, José Viñals, macroprudential regulation, Microprudential regulations, Nicolás Eyzaguirre, risk, Uruguay | 6 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. Continue reading
Filed under: Financial Crisis, Financial regulation, 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 March 27, 2011 by iMFdirect
By Dominique Strauss-Kahn
(Version in Español)
Earlier this month, I had the opportunity to discuss Latin America’s regional outlook with government leaders, parliamentarians, and university students in Brazil, Panama, and Uruguay.
The key conclusion that I took away from these meetings is that Latin America faces two principal economic challenges: to increase the sustainable rate of economic growth and to reduce the volatility of growth.
In my meeting in Calgary on March 26 with Finance Ministers of the region, I focused on the second challenge so that favorable conditions today do not come at the expense of a bust tomorrow.
It’s a nice coincidence that this meeting of Finance Ministers of the Americas and the Caribbean was held here in Calgary. Canada is a good example of “managing the good times,” but as in many countries across the globe, some challenges remain. Continue reading
Filed under: Economic Crisis, Economic outlook, Employment, Español, Fiscal Stimulus, Globalization, growth, Latin America | Tagged: Brazil, Calgary, Canada, credit bubble, Dominique Strauss-Kahn, inequality, macroprudential regulation, overheating | Leave a comment »
Posted on March 16, 2011 by iMFdirect
Guest post by David H. Romer,
University of California, Berkeley, and
co-host of the Conference on Macro and Growth Policies in the Wake of the Crisis
I had one major source of unhappiness with last week’s conference: the participants were largely silent about the dismal outlook in the advanced economies for the next several years. The current outlook for unemployment in the United States, Europe, and Japan is probably worse than it was in late 2008. Then, mainstream forecasts for 2009–2011 showed unemployment rising sharply—but generally to levels below what we are experiencing today—and then returning toward normal at a moderate pace. Today, not only is unemployment higher than most 2008 forecasts of its peak levels, but the expected pace of recovery is weaker.
Despite this deterioration, the dire sense of urgency in late 2008 has not increased. Indeed, it has largely disappeared. I find this complacency in the fact of vast, preventable suffering and waste hard to understand. Continue reading
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Fiscal policy, growth, IMF, International Monetary Fund | Tagged: capital controls, central bank swap lines, David H. Romer, equality, exchange market intervention, financial market, financial risk, fiscal policy, Liquidity support, macroeconomic stability, macroprudential regulation, monetary policy, policy instruments, policy targets, regulation, unemployment | 9 Comments »
Posted on March 13, 2011 by iMFdirect
By Olivier Blanchard
(Version in Français, Español)
The global economic crisis taught us to question our most cherished beliefs about the way we conduct macroeconomic policy. Earlier I had put forward some ideas to help guide conversations as we reexamine these beliefs. I was heartened by the wide online debate and the excellent discussions at a conference on post-crisis macroeconomic policy here in Washington last week. At the end of the conference, I organized my concluding thoughts around nine points. Let me go through them and see whether you agree or not. Continue reading
Filed under: Economic Crisis, Economic research, Financial Crisis, Financial regulation, Fiscal policy, growth, International Monetary Fund | Tagged: Adair Turner, agency theory, Andrew Sheng, Behavioral economics, capital controls, cross-border linkages, Dani Rodrik, Financial regulation, inflation targeting, Joseph Stiglitz, liquidity, macroeconomic policy, macroprudential regulation, Michael Spence, Olivier Blanchard, Paul Romer, policy instruments, policy targets, Robert Solow, SDRs, Special Drawing Rights, systemic crisis, Washington Consensus | 23 Comments »
Posted on November 19, 2010 by iMFdirect
By Olivier Blanchard
The crisis has forced economists and policymakers to go back to their drawing boards. Where did they go wrong, and what implications does the crisis have for both macroeconomic theory and macroeconomic policy making?
This was the topic of this year’s IMF Jacques Polak Research Conference. The conference was the first since the passing of Jacques Polak, after whom the conference has been named, and to which he came every year until last year. Present at the Fund’s creation and a long time Fund economist, Jacques had been described by the Managing Director as “a leader of critical thought during the post-war evolution of the global economy.” As such, this conference, and its focus on the post-crisis evolution of the global economy, was fitting a fitting tribute to Jacques. We shall miss him.
The twelve papers presented at the conference provided rich fodder for discussion. For two days, researchers and policymakers explored the contours of policy making in the post-crisis world. I want to share with you some of the major themes: Continue reading
Filed under: Advanced Economies, Economic Crisis, Financial Crisis, Financial regulation, IMF, International Monetary Fund | Tagged: capital flows, financial integration, financial markets, Financial regulation, financial sector, financial stability, fiscal consolidation, fiscal policy, fiscal space, Fiscal Stimulus, fiscal sustainability, hot money, IMF Jacques Polak Research Conference, Jacques Polak, macroprudential regulation, monetary policy, monetary policy rule, risk aversion | 4 Comments »
Posted on October 22, 2010 by iMFdirect
By John Lipsky
The devastating impact of the global financial crisis created a consensus that pre-crisis financial regulation didn’t take the “big picture” of the system as a whole sufficiently into account and, as a result, supervisors in many markets “missed the forest for the trees.” In other words, they did not take into account the macro-prudential aspects of regulation, which has now become the focus of many authorities.
Consensus regarding the need for macro-prudential regulation is particularly striking—previously this type of regulation had been used relatively little and, at present, there are no agreed standards that can be applied internationally. Continue reading
Filed under: Economic Crisis, Financial Crisis, Financial regulation, IMF, International Monetary Fund | Tagged: cross-border exposures, global crisis, Macro-prudential policies: Asian perspectives, macroprudential regulation, Microprudential regulations, Shanghai conference, standard-setting bodies, systemic risk | 22 Comments »
Posted on August 16, 2010 by iMFdirect
By Laura Kodres
Just as a tornado in Kansas transplanted Dorothy and, her dog, Toto, from familiar comforts to the unknown land of Oz, the global crisis has led many to wonder what has become of the global financial system and, more importantly, what will it look like next. Is the wicked witch of the West—excessive risk taking and leverage—really dead?
But now, as the storm subsides, there is time to speculate about what the future financial sector might look like. My IMF colleague, Aditya Narain, and I have done just that in a new Staff Position Note that attempts to discern the contours of this new financial landscape. What is clear is that the new landscape will be influenced by both the private and public sectors—their reactions to the crisis and to each other.
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial Crisis, Financial regulation, IMF, International Monetary Fund, Multilateral Cooperation | Tagged: banks, contagion, deleveraging, financial reform, Financial regulation, financial sector reform, financial sector supervision, financial supervision, financial system risk, global financial system, leverage, macrofinancial linkages, macroprudential regulation, nonbanks, regulatory perimeter, risk taking, systemic collapse, systemic risk | 5 Comments »