A Role for Financial and Monetary Policies in Climate Change Mitigation
By William Oman
July 2019 was the hottest month ever recorded on earth, with countries across the world experiencing record-breaking temperatures. […]
Keynes, the IMF, and the Future
By Gita Bhatt
If Lord Keynes, who helped usher in the post–World War II economic order at the Bretton Woods conference, visited the IMF today, he would be astonished at the institution’s evolution. […]
A Bumpy Road Ahead for the Global Financial System
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. […]
Top Ten Blogs of 2017
December 28, 2017
Read the top ten blogs of 2017 (photo: Times Square- New York-Pacific Press/SipaUSA/Newscom)
We have all had quite the year. Our readers’ interests in 2017 focused on topics that affect how people live their lives: why wages are low, rising income and wealth inequality, household debt, climate change, and the scourge of corruption, to name a few.
As we wrap up the highs and lows of 2017 and get ready for whatever 2018 has in store, here is the list of the top ten blogs of the year based on readership. From all the elves editors at IMFBlog, we wish you a year of peace and interesting reads.
Financial Stability Improves, But Rising Vulnerabilities Could Put Growth at Risk
October 11, 2017
Versions in Versions in عربي (Arabic), 中文 (Chinese), Español (Spanish), Français (French). 日本語 (Japanese), Русский (Russian)
The headquarters of the European Central Bank in Frankfurt, Germany: To avoid causing market turbulence, central banks will have to clearly communicate their plans to gradually unwind crisis-era policies (photo: Caro/Sven Hoffman/Newscom).
It seems like a paradox. The world’s financial system is getting stronger, thanks to healthy economic growth, buoyant markets, and low interest rates. Yet despite these favorable conditions, dangers in the form of rising financial vulnerabilities are starting to loom. That is why policymakers should act now to keep those vulnerabilities in check. […]
How Policy Makers Can Better Predict a Downturn – and Prepare
By Claudio Raddatz and Jay Surti
October 3, 2017
Versions in عربي (Arabic) 文, (Chinese), Español (Spanish), Français (French),日本語 (Japanese), Русский (Russian)
A trading floor in Singapore. Financial conditions provide valuable clues to the economic outlook and can improve the accuracy of forecasts (photo: Caro/Oberhaeuser/Newscom).
The global financial crisis showed that periods of robust growth and seeming calm in financial markets can be followed by a sudden surge in market volatility and an unexpected economic downdraft. That’s why it is so important for policy makers to keep a close watch on so-called financial conditions. These can include everything from bond yields and oil prices to foreign exchange rates and levels of domestic debt. […]
“To Lean or Not to Lean?” That is the Question
By Stefan Laseen, Andrea Pescatori, and Jarkko Turunen
Academics and policy-makers alike have long struggled with the question of whether to use monetary policy to dampen asset price booms – whether to “lean against the wind” or not. Can officials identify emerging asset price bubbles, what are the implications of bursting them, and is monetary policy the appropriate response to potential bubbles? These questions have become even more important to the policy debate in the wake of the global financial crisis, which was preceded by an unsustainable boom in sub-prime mortgage lending and housing prices.
Given over six years of near zero policy interest rates, should the U.S. Fed now use interest rates to lean against potential financial stability risks that may have built up?
Tailwinds or Headwinds? Adjusting the Economic Sails in Latin America
As the European crisis lingers and advanced economies stall, the next six to eighteen months will be challenging for Latin America. Increased global uncertainties may create headwinds for the region—greater stress in the global economy and markets—tailwinds, if the advanced countries’ problems are tackled and economies spring back to life, or volatile gusts—weak growth and continued uncertainty—like we are seeing now.
But it’s not easy to forecast the future of Latin America in these uncertain times, as we discuss in our just-published Regional Economic Outlook for Western Hemisphere. (Here I focus on Latin America, but our report covers the whole region, including North America, Central America, and the Caribbean.)
Tough Political Decisions Needed to Fix the Financial System
It was fitting that I should present our latest assessment of global financial stability in Sao Paulo, the financial center of one of the leading emerging economies. In common with many of its peers in Latin America, Brazil is recovering strongly from the crisis. But new financial stability challenges are emerging in this, and other fast-growing regions.
I have three key messages:
Financial risks have increased since April
Policymakers in both advanced and emerging economies need to step up their efforts to preserve financial stability and safeguard the recovery.
We have entered into a new phase of the crisis - a political phase- when tough political decisions will need to be made. Time is of the essence.