Why International Financial Cooperation Remains Essential


By Tobias Adrian and Maurice Obstfeld

Economic growth appears to be strengthening across the large economies, but that does not mean financial-sector regulation can now be relaxed. On the contrary, it remains more necessary than ever, as does international cooperation to ensure the safety and resilience of global capital markets. That is why the Group of Twenty (G20) finance ministers and central bank governors reiterated their support for continuing financial-sector reform at their meeting in Baden-Baden last week. Continue reading

Islamic Banking Proposals Get IMF Approval


By Ghiath Shabsigh, Ross Leckow, and Zeine Zeidane

Versions in:  ArabicFrenchIndonesian, and Malay

Islamic banking, a small but fast-growing corner of the financial world, is receiving greater attention from regulators and policy makers. The IMF recently adopted a set of proposals on Islamic banking and called for a more comprehensive set of policies to ensure financial stability in countries with Islamic banking and support the sound development of the industry. The IMF is now calling for additional work and cooperation by its staff with other international agencies to improve the adoption of relevant standards for Islamic banking and to address remaining regulatory gaps.  Continue reading

China Must Quickly Tackle its Corporate Debt Problems


By Joong Shik Kang and Wojciech S. Maliszewski

Version in 中文 (Chinese)

China urgently needs to tackle its corporate-debt problem before it becomes a major drag on growth in the world’s No. 2 economy. Corporate debt has reached very high levels and continues to grow. In our recent paper, we recommend that the government act promptly to adopt a comprehensive program that would sacrifice some economic growth in the short term while rapidly returning the economy to a sustainable growth path.

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The ECB’s Negative Rate Policy Has Been Effective but Faces Limits


By Andy Jobst and Huidan Lin

Versions in Français (French), and Español (Spanish)

More than two years ago, seeking to revive a moribund economy, the European Central Bank (ECB) embarked on a new monetary policy measure: charging interest on excess liquidity that banks held at the central bank. The move complemented a series of other easing measures aimed at bringing inflation back to the ECB’s price stability objective of below, but close to, two percent over the medium term. Continue reading

Sluggish Business Investment in the Euro Area: The Roles of Small and Medium Enterprises and Debt


By John C. Bluedorn and Christian Ebeke

Small businesses could be the lifeblood of Europe’s economy, but their size and high debt are two of the factors holding back the investment recovery in the euro area. The solution partly lies in policies to help firms grow and reduce debt.

Our new study, part of the IMF’s annual economic health check of the euro area, takes a novel bottom-up look at the problem. We analyze the drivers of investment using a large dataset of over six million observations in eight euro area countries, from 2003 to 2013: Austria, Belgium, Germany, France, Finland, Italy, Portugal, and Spain. Continue reading

Getting into Higher Gear: Why Structural Reforms Are Critical for Revving Up Global Growth


David Lipton 2016-1By David Lipton

Versions in عربي (Arabic), Español (Spanish)

Almost a decade after the start of the global financial crisis, the world economy is still trying to achieve escape velocity. The IMF’s recent forecast for global growth is a disappointing 3.1 percent in 2016 and 3.4 percent in 2017. And the outlook remains clouded by increased economic and political uncertainty, including from the impact of the Brexit vote.

Policymakers have taken forceful macroeconomic policy action to support growth, such as fiscal stimulus and appropriately accommodative monetary policy. But a lasting recovery remains elusive. Continue reading

Accelerating Financial Sector Development to Boost Growth in Sub-Saharan Africa


Anne-Marie Gulde-Wolf.IMFBy Anne-Marie Gulde-Wolf

Version in Français (French), Português (Portuguese)

There are many reasons why deeper financial development—the increase in deposits and loans but also their accessibility and improved financial sector efficiency—is good for sustainable growth in sub-Saharan Africa. For one, it helps mobilize savings and to direct funds into productive uses, for example by providing the start-up capital for the next innovative enterprise. This in turn facilitates a more efficient allocation of resources and increases overall productivity.

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