What Happens When Banks Stop Doing Business With Some Countries

By iMFdirect

When global banks decide to withdraw from some countries and no longer do business with banks there, the global effect so far has been a gentle ripple, but if unaddressed, it may become more like a tsunami for the countries they leave.

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Thinking Beyond the Crisis: Themes from the IMF’s 10th Annual Research Conference

By Olivier J. Blanchard 

We celebrated the 10th anniversary of the IMF’s research conference with an outstanding group of presenters and a record number of participants. The main topic of this year’s conference was “Financial Frictions and Macroeconomic Adjustment.”

Two days of scholarly exchange among researchers and policymakers focused on various themes related to the crisis. I’ve summarized here some of these themes along with their implications for future research.

1.      Household leverage played a critical role in shaping the dynamics during the current U.S. recession. The first paper of the conference provided convincing evidence that the U.S. counties where household leverage had grown the most during the boom were also the ones that experienced the largest busts as measured by home prices, defaults, auto sales, and unemployment. Future research should focus on the policy implications of these findings, especially in the context of the role of monetary policy in mitigating the adverse effects of asset bubbles. 

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