Financial Markets

A Bumpy Road Ahead for the Global Financial System

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” »

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

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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” »

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

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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” »

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|

A Framework for Currency Unions and IMF Lending

By Sean Hagan and Hugh Bredenkamp

March 16, 2018

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New guidance approved by the IMF represents an important step in how the Fund supports members of currency unions undertaking adjustment (photo: IMF).

Countries benefit in various ways from belonging to a currency union—a group of countries that share a single currency. Businesses can trade and invest across borders more easily. Member countries gain access to larger markets without facing currency risk. And in some circumstances, currency unions can help support their members when they are hit by external shocks. Continue reading “A Framework for Currency Unions and IMF Lending” »

By IMFBlog| March 16th, 2018|Advanced Economies, Asia, banking, capital flows, capital markets, Caribbean, currency, developing countries, Economic Crisis, Economic outlook, Economic research, euro zone, Europe, Europe's currency union, Financial Crisis, Financial markets, financial policy, Financial regulation, Financing, Fiscal policy, Government, IMF, International Monetary Fund, monetary policy, taxation, technology, trade|

Policy Actions to Sustain Growth and Guard Against Risks

By Christine Lagarde

March 15, 2018

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

Even though the sun still shines on the global economy, there are more clouds on the horizon (iStock by GettyImages).

When the Group of Twenty finance ministers and central bank governors met last October, there was a sense of optimism about the global economic upswing and the opportunities for much-needed reforms.

When they meet again in Buenos Aires next week, their focus will be on the policies needed to protect this upswing against downside risks and bolster growth going forward.

The good news is that the growth momentum has continued to strengthen, involving three- quarters of the world economy.

Continue reading “Policy Actions to Sustain Growth and Guard Against Risks” »

By IMFBlog| March 15th, 2018|Advanced Economies, Asia, banking, China, developing countries, Economic outlook, Economic research, education, Employment, Europe, exchange rates, exports, Finance, Financial Crisis, Financial markets, Fiscal, G-20, Gender issues, Globalization, Government, growth, IMF, imports, inclusive growth, income, Inequality, inflation, International Monetary Fund, Investment, jobs, labor markets, Low-income countries, Multilateral Cooperation, productivity, Public debt, taxation, trade, U.S., Uncategorized, unemployment|

Addressing the Dark Side of the Crypto World

By Christine Lagarde

March 13, 2018

Versions in عربي (Arabic), 中文 (Chinese), Français (French), baˈhasa indoneˈsia (Indonesian), 日本語 (Japanese), Português (Portuguese), Русский (Russian)

The same reason crypto-assets like Bitcoin are so appealing is also what makes them dangerous (iStock by GettyImages).

Whether Bitcoin’s value goes up or Bitcoin’s value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets?

The technology behind these assets—including blockchain—is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries. Continue reading “Addressing the Dark Side of the Crypto World” »

By IMFBlog| March 13th, 2018|Advanced Economies, banking, capital markets, commodities, Corporate Risk, Economic research, Financial markets, financial policy, Financial regulation, Global Governance, Investment, technology, Transition|

Fintech Quiz: How Much Do You Know?

By IMFBlog

March 12, 2018

Rapid advances in digital technology are transforming the financial services landscape (iStock by Getty Images).

From artificial intelligence to cryptography, rapid advances in digital technology are transforming the financial services landscape, creating opportunities and challenges for consumers, service providers, and regulators alike. This new wave of technology is often called “fintech” and the industry is thriving. Consumers worldwide are using two or more fintech services, sometimes without knowing they are using fintech services. Continue reading “Fintech Quiz: How Much Do You Know?” »

By IMFBlog| March 12th, 2018|Advanced Economies, Africa, Asia, capital flows, capital markets, China, correspondent banking, currency, developing countries, Emerging Markets, euro zone, Europe, Finance, Financial Crisis, Financial markets, financial policy, Financial regulation, Financing, Globalization, Government, income, infrastructure, International Monetary Fund, Investment, Low-income countries, Middle East, productivity, taxation, technology, trade, U.S., Uncategorized|

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