How Iceland Recovered from its Near-Death Experience

2017-04-15T14:16:32-04:00October 26, 2011|

When I traveled to Reykjavik in October 2008 to offer the IMF’s assistance, the situation there was critical. The country’s three main banks—which made up almost the entire financial system—had just collapsed within a week of each other. The sense of fear and shock were palpable—few, if any, countries had ever experienced such a catastrophic economic crash. Today, three years later, it is worth reflecting on how far Iceland―a country of just 320,000 people―has come since those dark days back in 2008.

Unwinding Crisis Policies in Europe: Are We There Yet?

2017-04-15T14:42:25-04:00January 17, 2010|

To successfully unwind the extraordinary policy measures taken in response to the crisis, we need more than just a good sense of the state of the economic recovery and the degree of financial stability. We also need to know to what extent the global economy currently is influenced by those supportive policy measures. Marek Belka, Director of the IMF's European Department and a former Prime Minister of Poland, discusses whether or not it is safe yet to change tack.

Year in Review: Lessons from History–No Way Back to Cheap, Easy Credit

2017-04-15T14:42:40-04:00December 21, 2009|

The Great Recession has destroyed the possibility of consuming and investing on cheap and easily available credit without regard to quality. Households in major industrial countries will have to borrow less and save more than they did before the crisis. At the moment, interest rates are extremely low while central banks try to offset the withdrawal of credit from financial institutions, but when rates return to normal levels the new reality of expensive credit will register fully.

Unlocking Central Asia’s Huge Potential

2017-04-15T14:50:55-04:00October 16, 2009|

The IMF has just finished its Annual Meetings in Istanbul, the traditional start of the old silk road and the gateway to Central Asia. Strategically located between East Asia and Europe, and South Asia and Russia, Central Asia is rich in resources and faces tremendous opportunities—yet to be made the most of.

Fixing the Financial System

2017-04-15T14:54:04-04:00August 25, 2009|

By John Lipsky in Jackson Hole

Despite tentative signs that the global recession is ending, it’s clear that a full recovery will remain inhibited until financial markets are restored to health. While financial market conditions have improved—reflecting among other things massive public sector support—key credit channels remain strained, creating a drag on growth.

One of the keys to strengthening financial markets will be to put securitization markets on a sounder footing, an issue I discuss below.

Rebuilding active and innovative financial systems will be critical for sustaining a new global expansion. After being propped up by government intervention, a […]

Jackson Hole conference: A Grand Teton Perspective. . .

2017-04-15T14:54:09-04:00August 24, 2009|

By John Lipsky

Every year at this time, senior Federal Reserve officials and central bank heads from around the world gather in Jackson Hole, Wyoming—together with leading economists from universities and the private sector—to hear presentations on key policy topics and to discuss the challenges facing the global economy. The spectacularly beautiful setting at the foot of the Grand Teton mountains provides calm and perspective.

Last year’s gathering took place on the eve of historic financial turmoil and subsequent economic downturn. One year later, it is clear that progress is being made to overcome the crisis, but […]

Regionally Coordinated Solutions to Foster Financial Stability in Emerging Europe

2017-04-15T14:54:16-04:00August 18, 2009|

By Ajai Chopra

Europe’s economic and financial integration has been a tremendous success, but the region is now under great stress. As the global economic crisis has shown, the flipside of Europe’s successful integration has been a synchronized economic downturn and complex financial spillovers between countries.

For those of us involved in providing financing and policy advice to emerging Europe, it quickly became apparent that the official sector would be more effective if it managed to secure the cooperation of private western banks operating in emerging market countries in central, eastern, and southern Europe (CESE).

During the past […]

Sweden’s Approach to Bank Resolution: Have We Learned the Right Lessons?

2017-04-15T14:54:25-04:00August 11, 2009|

By Ajai Chopra

Resolving any financial crisis is no easy matter. Resolving the ongoing international crisis—with many institutions, countries, and regulators involved—is unusually challenging, both intellectually and in terms of practical policymaking.

Progress has been made thanks to the slew of measures adopted by global policymakers. But a stabilized patient is not a cured patient, particularly when stabilization largely reflects significant shifts of risk from the private financial sector to the public sector. And the early reappearance of practices thought to have played a part in fueling the crisis—sizeable bonuses, for example—is troubling.

[…]

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