The Global Expansion: Still Strong but Less Even, More Fragile, Under Threat

By Maurice Obstfeld

July 16, 2018

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The escalation of trade tensions is the greatest near-term threat to global growth (photo: wildpixel/Getty Images by iStock)

Amid rising tensions over international trade, the broad global expansion that began roughly two years ago has plateaued and become less balanced. Continue reading “The Global Expansion: Still Strong but Less Even, More Fragile, Under Threat” »

Chart of the Week: When High Yield Goes Boom

By Divya Kirti

June 26, 2018

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A credit boom can be fueled by excessive optimism among investors (photo: Nick White/Newscom)

We’ve all heard about good cholesterol and bad cholesterol. Too much of the good stuff probably won’t do you any harm. Too much of the bad stuff can lead to a heart attack. Continue reading “Chart of the Week: When High Yield Goes Boom” »

Estimating Cyber Risk for the Financial Sector

By Christine Lagarde

June 22, 2018

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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. Continue reading “Estimating Cyber Risk for the Financial Sector” »

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” »

Mounting Debt Threatens Sustainable Development Goals

By Chris Lane and Elliott Harris

April 27, 2018

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A market in Port-au-Prince, Haiti: some developing countries are falling behind when it comes to incomes (photo: Dumont Bildarchiv/Newscom).

In 2015, 193 countries adopted the 17 Sustainable Development Goals (SDGs) as an overarching policy roadmap through 2030. These goals are predicated on the idea that for a sustainable future, economic growth must go hand-in-hand with social inclusion and protection of the environment.

Our respective institutions, the United Nations Department of Economic and Social Affairs (UNDESA) and the International Monetary Fund (IMF), fully support these goals. From the UN perspective, they represent a down payment on a more peaceful, prosperous, and cooperative world, especially in increasingly perilous times. For the IMF, they help underpin economic stability and sustainable and inclusive economic growth. Continue reading “Mounting Debt Threatens Sustainable Development Goals” »

A Bumpy Road Ahead for the Global Financial System

By Tobias Adrian

April 18, 2018

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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

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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” »

The Digital Gamble: New Technology Transforms Fiscal Policy

By Vitor Gaspar and Geneviève Verdier

April 12, 2018

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Traffic in Singapore: the city uses digital technology for road pricing to manage road congestion congestion (photo: Kua Chee Siong/ SPH/Newscom)..

In Rwanda, digitally-monitored drones deliver blood supplies to hospitals. In Estonia, it takes five minutes to file taxes and 99 percent of government services are available online. Singapore was the first city to implement electronic road pricing to manage congestion. The world is becoming digital, and reliable, timely, and accurate information is available at the push of a button. Governments are following suit, using digital tools for tax and expenditure policy, public financial management, and public service delivery.  Continue reading “The Digital Gamble: New Technology Transforms Fiscal Policy” »

Risky Business: Reading Credit Flows for Crisis Signals

By Claudio Raddatz Kiefer and Jérôme Vandenbussche 

April 10, 2018

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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” »

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