Financial Markets

Estimating Cyber Risk for the Financial Sector

June 22, 2018

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” »

By IMFBlog| June 22nd, 2018|Advanced Economies, banking, capital markets, Economic research, Financial markets, technology|

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” »

By IMFBlog| May 30th, 2018|Advanced Economies, Asia, banking, capital flows, capital markets, credit, currency, Economic outlook, Emerging Markets, euro zone, Europe, Europe's currency union, Finance, Financial markets, financial policy, Financial regulation, Financing, Government, income, Uncategorized|

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” »

By IMFBlog| May 3rd, 2018|Advanced Economies, banking, capital markets, Economic research, Finance, Financial markets, Financial regulation, Interest Rates, Investment, monetary policy|

Mounting Debt Threatens Sustainable Development Goals

By Chris Lane and Elliott Harris

April 27, 2018

Versions in baˈhasa indoneˈsia(Indonesian), Español (Spanish), Français (French), Português (Portuguese)

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” »

By IMFBlog| April 27th, 2018|capital markets, corruption, Debt Relief, Financial markets, Global Governance, IMF, inclusive growth, Inequality, Infrastructure, Investment, Public debt, Reform, taxation, trade|

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” »

By IMFBlog| April 18th, 2018|banking, Economic outlook, Emerging Markets, Financial Crisis, Financial markets, IMF, International Monetary Fund|

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” »

By IMFBlog| April 16th, 2018|Advanced Economies, banking, capital markets, commodities, Corporate Risk, Economic research, Financial markets, Financing, Global Governance, Globalization, Investment, technology|

The Digital Gamble: New Technology Transforms Fiscal Policy

By Vitor Gaspar and Geneviève Verdier

April 12, 2018

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

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” »

By IMFBlog| April 12th, 2018|Advanced Economies, Africa, Asia, capital markets, China, developing countries, Economic outlook, Economic research, Emerging Markets, Europe, Finance, Financial markets, financial policy, Financial regulation, Financing, Fiscal, Fiscal discipline, Fiscal policy, Fiscal Stimulus, Globalization, Government, IMF, India, Infrastructure, International Monetary Fund, Investment, Japan, LICs, Low-income countries, monetary policy, Politics, Reform, Spring Meetings, taxation, technology, trade, U.S., Uncategorized|

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” »

By IMFBlog| April 10th, 2018|Advanced Economies, Annual Meetings, Asia, banking, capital flows, capital markets, China, commodities, Corporate Risk, credit, currency, developing countries, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Employment, Financial Crisis, Financial markets, Financial regulation, Global Governance, Government, growth, IMF, Infrastructure, Interest Rates, International Monetary Fund, Investment, Jobs, monetary policy, Public debt, Reform, U.S.|

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” »

The Economic Scars of Crises and Recessions

By Valerie Cerra and Sweta C. Saxena

March 21, 2018

Version in 日本語 (Japanese), Português (Portuguese)

New study finds that all types of recessions lead to permanent losses in output and welfare (photo: Peshkov/iStock by GettyImages).

Economic recessions are typically described as short-term periods of negative economic growth. According to the traditional business cycle view, output moves up and down around its long-term upward trend and after a recession, it recovers to its pre-recession trend. Our new study casts doubt on this traditional view and shows that all types of recessions—including those arising from external shocks and small domestic macroeconomic policy mistakes—lead to permanent losses in output and welfare. Continue reading “The Economic Scars of Crises and Recessions” »

By IMFBlog| March 21st, 2018|Advanced Economies, capital markets, currency, developing countries, Economic Crisis, Economic outlook, Economic research, Emerging Markets, exchange rates, Finance, Financial Crisis, Financial markets, Financial regulation, Financing, Government, IMF, income, inflation, International Monetary Fund, Investment, Jobs, labor force, labor markets, Low-income countries, monetary policy, Politics, productivity, recession, U.S., Uncategorized, unemployment|

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