Fair and Substantial—Taxing the Financial Sector

Last week, the IMF gave an interim report to the G-20 finance ministers focused on the options in raising money from the financial sector to pay for the costs of government intervention from which it benefits. That report is confidential, but—you may have noticed—has still managed to attract a lot of attention. In this blog, I set set out how the IMF's thinking on this stands.

Learning from the Crisis: Future IMF Lending Role

The IMF resource base needs to be adequate to deal with most shocks. Some observers, however, worry that a large IMF with beefed-up financing instruments would add to moral hazard, encouraging reckless lending or unsafe policies. This is less of an issue when IMF lending is targeted to deal with “exogenous” shocks, i.e., shocks that cannot be influenced by the behavior of the individual country or its creditors.

World Faces Serious New Economic Challenges

We find ourselves at an important new stage of the crisis. A global depression has been averted. The world economy is recovering, and recovering better than we had previously thought likely. This is certainly welcome news. But new---and no less formidable—challenges have presented themselves.

IMF Sees Financial Risks Still Elevated

Global financial risks remain elevated: financial stability has not been secured, as the recovery is still fragile, and the repair of consumer and financial balance sheets is still ongoing. Furthermore, there are concerns over rising sovereign risks related to the buildup of public debt that need to be carefully monitored and addressed.

Emerging Market Countries and the Crisis: How Have They Coped?

The varied experience of emerging market economies during the global financial crisis underscores an important lesson: good policies beget good outcomes. Investing during good times to develop a sound policy framework that delivers stronger fundamentals and lower vulnerabilities yields large dividends during crises. In the current crisis, low-vulnerability countries had lower output declines, more space to undertake countercyclical policies, and quicker recoveries.

Reforming the Financial Landscape After the Crisis

The IMF has released the three analytical chapters in our upcoming Global Financial Stability Report. These chapters cover some of the most relevant areas facing policymakers as they devise financial reforms that address the systemic risks that arose during the crisis and deal with potential forthcoming vulnerabilities.

IMF Youth Dialog: Addressing Mideast Unemployment

After an unprecedented global economic downturn, recovery is beginning to take hold across the world. Nevertheless, the downturn has heightened the core challenges that countries faced before the crisis took hold. Among these, one that stands out in the countries of the Middle East and North Africa is youth employment—or a lack of it.

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