Posted on August 10, 2016 by iMFdirect
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
Filed under: banking, Economic research, euro zone, Europe, Financial regulation, IMF, International Monetary Fund, negative interest rates | Tagged: banking, ECB, economic growth, Europe, European Central Bank, excess liquidity, IMF, International Monetary Fund, Japan, monetary policy, negative interest rates, negative rate policy, price stability, Switzerland | 2 Comments »
Posted on August 4, 2016 by iMFdirect
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
Filed under: banking, Economic research, euro zone, Europe, Finance, Financial Crisis, IMF, International Monetary Fund, Investment, Public debt | Tagged: Austria, bank financing, banking, Belgium, credit risk, euro area, Europe, Finland, France, Germany, IMF, International Monetary Fund, investment, Italy, leverage, nonperforming loans, Portugal, public debt, small and medium-sized enterprises, Spain | Leave a comment »
Posted on April 13, 2016 by iMFdirect
By José Viñals
Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)
Over the last six months, global financial stability risks increased as a result of the following developments:
- First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference.
- Second, falling commodity prices and concerns about China’s economy have put pressure on emerging markets and advanced economy credit markets.
- Finally, confidence in policy traction has slipped, amid concerns about the ability of overburdened monetary policies to offset the impact of higher economic and political risks.
Filed under: Advanced Economies, banking, euro zone, Europe, Finance, Financial markets, IMF, International Monetary Fund, oil, U.S. | Tagged: banking, banks, China, corporate sector, debt, emerging market economies, euro area, Europe, Global Financial Stability Report, monetary policy, non-performing loans, NPLs, structural reforms | Leave a comment »
Posted on March 3, 2016 by iMFdirect
By Jihad Dagher, Giovanni Dell’Ariccia, Luc Laeven, Lev Ratnovski, and Hui Tong
The appropriate level of bank capital and, more generally, a bank’s capacity to absorb losses, has been a contentious subject of discussion since the financial crisis. Larger buffers give bankers “skin in the game” helping to prevent excessive risk taking and absorb losses during crises. But, some argue, they might increase the cost of financial intermediation and slow economic growth.
Filed under: banking, Europe, Finance, Financial Crisis, International Monetary Fund, U.S. | Tagged: advanced economies, bank capital, bank credit, bank recapitalization, banking, capital buffers, capital flows, Europe, IMF, International Monetary Fund, nonperforming loans, United States | Leave a comment »
Posted on June 4, 2014 by iMFdirect
By Jesus Gonzalez-Garcia and Francesco Grigoli
(Version in Español)
Government ownership of banks is still common around the world, despite the large number of privatizations that took place over the past four decades as governments reduced their role in the economy. On average, state-owned banks hold 21 percent of the assets of the banking system worldwide. In Latin American and Caribbean countries, the public banks’ share is about 15 percent, with some of them showing very large shares, for instance, Argentina, Brazil, Uruguay, and Costa Rica are all over 40 percent (see Figure 1).
State-owned banks play an important role in the financial system. They fulfill functions that are not performed by private banks, provide financing for projects that benefit the rest of the economy, and provide countercyclical lending (lending more when the economy is weak). But public banks usually respond to the needs of governments owing to the state’s obvious involvement in their administration. As a result, government’s participation in the banking system may weaken fiscal discipline by allowing the public sector to access financing that they would not obtain from other sources.
In our recent study, we use a panel dataset for 123 countries to test whether a larger presence of state-owned banks in the banking system is associated with more credit to the public sector, larger fiscal deficits, higher public debt ratios, and the crowding out of credit to the private sector.
Filed under: Economic outlook, Economic research, Emerging Markets, Español, Finance, Fiscal policy, Government, International Monetary Fund, Latin America, Public debt | Tagged: Argentina, bank credit, banking, big banks, Caribbean, Latin America, public sector, Uruguay | Leave a comment »
Posted on March 10, 2014 by iMFdirect
By Stijn Claessens
Those who cannot remember the past are condemned to repeat it.
The world has been littered with many financial crises over the centuries, yet many a time these lessons are ignored, and crises recur. Indeed, there are many clear lessons on the causes of past crises, the severity of their consequences, and how future crises can be prevented or better managed when they occur.
This applies to the 2007-09 global financial crisis that brought colossal disruptions in asset and credit markets, massive erosions of wealth, and unprecedented numbers of bankruptcies. Six years after the crisis began, its lingering effects are still visible in advanced and emerging markets alike. It is, therefore, a good time to take stock.
Filed under: Advanced Economies, Economic research, Financial Crisis, Fiscal policy, IMF, International Monetary Fund, Politics | Tagged: banking, book launch, economic reform, financial crises, macroeconomics | 2 Comments »
Posted on October 9, 2013 by iMFdirect
By José Viñals
(Versions in 中文, Français, 日本語, Русский, and Español)
The global financial system faces several major transitions along the road to greater financial stability. These transitions will be challenging because they are accompanied by substantial risks.
So what are these transitions?
- The first one is the transition in the United States from a prolonged period of monetary accommodation towards a normalization of monetary conditions. Will this transition be smooth or bumpy?
- Second, emerging markets face a transition to more volatile external conditions and higher risk premiums. What needs to be done to keep emerging markets resilient?
- Third, the euro area is moving to a stronger union and stronger financial systems. This report focuses on the close links between the corporate and banking sectors. What are the implications of the corporate debt overhang for bank health?
- Fourth, Japan is moving towards the new policy regime of Abenomics. The stakes are high. Will Japan’s policies be comprehensive enough to ensure stability?
- And finally, there is the global transition to a safer financial system, where much remains to be done.
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, growth, International Monetary Fund, Low-income countries, Public debt | Tagged: banking, emerging market, euro area, financial regulatory reform, GFSR, Global Financial Stability Report, Japan, José Viñals, monetary policy, United States | Leave a comment »