Estimating Cyber Risk for the Financial Sector

By Christine Lagarde

June 22, 2018

Versions in  عربي,  中文Français , Русский 

Average annual losses to financial institutions from cyber-attacks could reach a few hundred billion dollars a year (photo: Eti Ammos/iStock by Getty Images)

Cyber risk has emerged as a significant threat to the financial system. An IMF staff modeling exercise estimates that average annual losses to financial institutions from cyber-attacks could reach a few hundred billion dollars a year, eroding bank profits and potentially threatening financial stability. Continue reading “Estimating Cyber Risk for the Financial Sector” »

An Imbalance in Global Banks’ Dollar Funding

By John Caparusso, Yingyuan Chen, Hideo Hashimoto, David Jones, Will Kerry and Aki Yokoyama

June 12, 2018

Versions in Español, DeutscheFrançais, 日本語Português

The US Treasury is issuing more T-bills, potentially putting upward pressure on the interest rates non-US banks must pay for short-term dollar funding (photo: Jennifer Hack/KRT/Newscom)

For companies and investors outside the United States, the dollar is often the currency of choice. Surprisingly, though, US banks play only a limited role in lending dollars to international borrowers. Most of the $7 trillion in banks’ dollar lending outside the United States is handled by banks based in Europe, Japan and elsewhere. Continue reading “An Imbalance in Global Banks’ Dollar Funding” »

By | June 12th, 2018|Advanced Economies, banking, currency, Europe, U.S.|

Our Digital Future

By Camilla Lund Andersen

May 30, 2018

“Money makes the world go around,” Liza Minnelli famously sang in the movie Cabaret. Money has for centuries been central to human relationships. Loss of faith in its value can result in economic and political instability, even war. In the past few years, financial technology—fintech for short—has caught the world’s imagination by offering alternatives to traditional means of payment. Will digitalization redefine money? In this issue, we explore the possible consequences, good and bad. Continue reading “Our Digital Future” »

Volatility Strikes Back

By Sergei Antoshin, Fabio Cortes, Will Kerry and Thomas Piontek

May 3, 2018 

Investors who bet on continued low volatility suffered steep losses (photo: Richard B. Levine/Newscom).

The bouts of volatility in early February and late March that spooked investors were confined to equity markets. Nevertheless, they illustrate the potential for sudden market moves to expose fragilities in the financial system more broadly.

With central banks in advanced economies set to normalize their monetary policies just as trade and geopolitical tensions flare up, economic and policy uncertainty may rise and financial conditions may tighten abruptly. Continue reading “Volatility Strikes Back” »

Bringing Down High Debt

By Vitor Gaspar and Laura Jaramillo

April 18, 2018

Versions in عربي (Arabic), 中文 (Chinese),  Español (Spanish), Français (French), 日本語 (Japanese), Português (Portuguese), Русский (Russian)

High debt makes governments’ financing vulnerable to sudden changes in market sentiment (photo: NYSE-LUCAS JACKSON-REUTERS Newscom).

Global debt hit a new record high of $164 trillion in 2016, the equivalent of 225 percent of global GDP. Both private and public debt have surged over the past decade. High debt makes government’s financing vulnerable to sudden changes in market sentiment. It also limits a government’s ability to provide support to the economy in the event of a downturn or a financial crisis.

Countries should use the window of opportunity afforded by the economic upswing to strengthen the state of their fiscal affairs. The April 2018 Fiscal Monitor explores how countries can reduce government deficits and debt in a growth-friendly way.

Continue reading “Bringing Down High Debt” »

A Bumpy Road Ahead for the Global Financial System

By Tobias Adrian

April 18, 2018

Versions in عربي (Arabic), 中文 (Chinese),  Español (Spanish), Français (French), 日本語 (Japanese),   Português (Portuguese),  Русский (Russian)

An unexpected increase in inflation could prompt the Federal Reserve and other central banks to raise interest rates faster than currently anticipated, roiling financial markets (photo: Tom Williams/CQ Roll Call/Newscom).

The current economic environment remains favorable, but short-term risks to global financial stability have increased in the past six months, as a result of a spike in stock-market volatility in February and continuing investor concerns about rising geopolitical and trade tensions. Looking ahead, the odds of a downturn remain elevated, and there’s even a small chance of a global economic contraction over the medium-term. Continue reading “A Bumpy Road Ahead for the Global Financial System” »

An Even-handed Approach to Crypto-Assets

By Christine Lagarde

April 16, 2018

Versions in  عربي (Arabic), 中文 (Chinese),  Español (Spanish), Français (French), 日本語 (Japanese), Português (Portuguese), Русский (Russian)

Healthcare companies are studying how to use the technology behind crypto assets to maintain confidential medical data (BSIphotos/Newscom).

The dizzying gyrations of crypto-assets such as Bitcoin invite comparisons with the tulip mania that swept Holland in the 17th century and the recent dot-com bubble. With more than 1,600 crypto-assets in circulation, it seems inevitable that many will not survive the process of creative destruction.

In my blog last month, I looked at the dark side of crypto-assets, including their potential use for money laundering and the financing of terrorism. Here, I want to examine the promise they offer. A judicious look at crypto-assets should lead us to neither crypto-condemnation nor crypto-euphoria. Continue reading “An Even-handed Approach to Crypto-Assets” »

Risky Business: Reading Credit Flows for Crisis Signals

By Claudio Raddatz Kiefer and Jérôme Vandenbussche 

April 10, 2018

Versions in عربي (Arabic),  中文 (Chinese),  Español (Spanish),  Français (French), 日本語 (Japanese), Português  (Portuguese), Русский (Russian)

The odds of a severe economic downturn are higher when a growing portion of credit flows to riskier firms, according to a new IMF study (Photo: Pali 137/ iStock by Getty Images).

Supervisors who monitor the health of the financial system know that a rapid buildup of debt during an economic boom can spell trouble down the road. That is why they keep a close eye on the overall volume of credit in the economy. When companies go on a borrowing spree, supervisors and regulators may decide to put the brakes on credit growth.

Trouble is, measuring credit volume overlooks an important question: how much of that additional money flows to riskier companies – which are more likely to default in times of trouble—compared with more creditworthy firms? The IMF’s latest Global Financial Stability Report seeks to fill that gap by constructing measures of the riskiness of credit allocation, which should help policy makers spot clouds on the economic horizon. Continue reading “Risky Business: Reading Credit Flows for Crisis Signals” »

For Home Prices in London, Check the Tokyo Listings

By Claudio Raddatz Kiefer and Jane Dokko

April, 10, 2018

Versions in عربي (Arabic);  中文 (Chinese), Español (Spanish),  Français (French), 日本語 (Japanese),  Português (Portuguese)

Hong Kong viewed from Victoria Peak. House prices across countries and cities are increasingly moving in tandem (Photo: Fraser Hall/Robert Harding/Newscom).

If house prices are rising in Tokyo, are they also going up in London?

Increasingly, the answer is yes.

In recent decades, house prices around the world have shown a growing tendency to move in the same direction at the same time. What accounts for this phenomenon, and what are the implications for the world economy? These are questions that IMF economists explore in Chapter 3 of the latest Global Financial Stability Report. Continue reading “For Home Prices in London, Check the Tokyo Listings” »

Chart of the Week: Malaysia Needs More Women in the Workforce

By IMFBlog

April 2, 2018

Version in baˈhasa indoneˈsia (Indonesian)

Four students walk past a bank in Kuala Lumpur, Malaysia: Policies like improving the quality of education can help the country increase the number of women in the workforce (photo: John Mulligan/iStock by Getty Images).

Malaysia, a country well on its way to achieving high income status, can increase the number of women in the labor force by implementing key labor market reforms. And the country should, because our research shows that more women in the workforce benefits the economy.  Continue reading “Chart of the Week: Malaysia Needs More Women in the Workforce” »

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