COVID-19 Worsens Pre-existing Financial Vulnerabilities
By Tobias Adrian and Fabio Natalucci
عربي, 中文, Español, Français, 日本語, Português, Русский
Much the same way COVID-19 hits people with pre-existing health conditions more strongly, so is the pandemic-triggered economic crisis exposing and worsening financial vulnerabilities that have built up during a decade of extremely low rates and volatility. […]
Chart of the WeekTracking the $9 Trillion Global Fiscal Support to Fight COVID-19
By Bryn Battersby, W. Raphael Lam, and Elif Ture
Governments have put forward swift and significant emergency lifelines to protect people in response to the pandemic. […]
A Capital Market Union for Europe: Why It’s Needed and How to Get There
By Ashok Vir Bhatia, Srobona Mitra, and Anke Weber
When savers and firms invest and borrow beyond their national borders, they enjoy opportunities to diversify their portfolios and lower their funding costs, respectively. […]
Five Actions to Strengthen the Euro Area Banking Union
By Atilla Arda, Daniel Hardy, and Maike B. Luedersen
December 14, 2018
View of skyscrapers in the banking district in Frankfurt am Main, Germany: Progress has been made, but more needs to be done to strengthen the euro area’s banking union (photo: imageBROKER/Stefan Ziese/Newscom)
Dealing with problem banks in a prompt, efficient, and even-handed manner is essential for the European banking union. […]
With Global Financial Markets, How Much Control Do Countries Have Over Economic Policies?
By Selim Ali Elekdag and Gaston Gelos
Versions in عربي (Arabic), Français (French), Русский (Russian), and Español (Spanish)
The outlook for further interest-rate increases by the US Federal Reserve revives interest in a compelling question: In an increasingly integrated global financial system, how much control do countries outside of the US retain over their economic policies?
Going with the Flow: Benefits of Capital Inflows for Emerging Markets
By Deniz Igan
Michael Mussa, a former Chief Economist of the IMF, famously likened capital account liberalization to fire. In his comments at the IMF Economic Forum on October 2, 1998, he said: “Fire warms our homes, it cooks our food, our internal combustion engines,” and continued: “No doubt, fire is very useful, and we are not going to give up its manifold benefits. On the other hand, fire can also burn you down and do a great deal of damage.”
Fixing the Great Distortion: How to Undo the Tax Bias Toward Debt Finance
By Ruud de Mooij, Michael Keen, and Alexander Tieman
“The Great Distortion.” That’s what The Economist, in its cover story of May 2015¸ called the systematic tax advantage of debt over equity that is found in almost every tax system.
This “debt bias” is now widely recognized as a real risk to economic stability. A new IMF study argues that it needs to feature more prominently on tax reform agendas; it also sets out options for how to do that.
Banks Should Help, Not Hinder the Economy
By Will Kerry and Andrea Maechler
Banks are struggling to overhaul the way they do business given new realities and new regulations adopted in the aftermath of the global financial crisis. While banks are generally stronger—they have more capital—they are less profitable, as measured by the return on equity. There are a number of reasons behind this, including: anemic net income at banks, particularly in the euro area; higher levels of equity; and banks taking fewer risks.
If they cannot change their business models, there is a risk that banks will not be able to provide enough credit to help the economy grow and recover.
The MENA Jobs and Growth Challenge: How Can Finance Help?
Most policymakers in the Middle East and North Africa agree that stronger economic growth is a crucial component of any strategy to address the region’s persistently high levels of unemployment and raise its living standards. One question that arises is: What role can the financial sector play?
It is well known that a dynamic and vibrant financial sector will improve economic outcomes for a country, leading to faster and more equitable economic growth. The key to answering this question, therefore, is to look to the past and examine how the financial sector has contributed historically to growth in the region.
Unfortunately, the experience in the Middle East and North Africa has not been as successful as in other regions. How, then, can policymakers in the region enhance the financial system’s contribution to growth?