Posted on June 2, 2011 by iMFdirect
By Anoop Singh
Capital flows into emerging Asia should be high on the ‘watch list’ for policymakers in the region. But, perhaps, not in the way we had previously anticipated.
Twelve months ago our policy antennae were keenly attuned to the risks posed by the foreign capital that flooded into Asia from mid-2009 onwards. What was remarkable about this was the speed of the rebound after the massive drop during the global financial crisis. Within just 5 quarters, net inflows rose from their early 2009 trough to their mid-2010 peak—a mere one-fifth of the time that typically elapsed between troughs and peaks in the cycle of capital flows during the pre-Asian crisis period.
Another twelve months on, what we’re seeing is not really all that “exceptional”—a point often overlooked in the current debate on capital inflows to emerging markets. (more…)
Filed under: Asia, Economic outlook, Emerging Markets, IMF, International Monetary Fund | Tagged: Asian crisis, capital flows, emerging Asia, external buffers, financial risk, financial stability, global financial crisis, Macroeconomic policies, macroprudential policies, monetary policy, monetary transmission, overheating, portfolio flows, Regional Economic Outlook: Asia and Pacific, risky assets | Leave a Comment »
Posted on December 10, 2009 by iMFdirect
By José Viñals
The IMF held a high-level conference last week on unwinding public interventions in the financial sector. Insightful discussions took place among policymakers, academics, and the private sector, highlighting several areas where a broad consensus appears to be emerging, as well as some challenges that policymakers are about to face.
There was broad agreement that an exit strategy from monetary, fiscal, and financial sector interventions is essential. The pivotal goal of this exit process would be to arrive at a condition of price stability, fiscal sustainability, and financial stability, including a new financial landscape that is much safer than currently exists. This will provide the necessary underpinnings for stable, strong, and balanced growth.
It will be relatively easy to unwind financial interventions that have sunset clauses or have penal rates so they become unattractive as market conditions normalize (photo: Sajjad Hussain/AFP/Getty Images)
Filed under: Advanced Economies, Economic Crisis, Emerging Markets, Financial regulation, Fiscal Stimulus, recession | Tagged: asset bubbles, exit strategy, fiscal sustainability, risky assets, spillover effects | 2 Comments »