The Top Ten Blogs of 2016

by iMFdirect

What a year it has been.  12 months with big implications for the global economy.

In 2016 our readers’ curiosity focused on a wide range of hot topics in the world of economic and financial policy: the economic impact of migration, China’s economic transition, the prospects for negative interest rates, the way forward for Greece, the future of commodity prices, and the outlook for Latin America, to name a few.  We compiled this top ten list for the past year based on readership.  (more…)

Global Financial Stability: Vulnerabilities, Legacies, and Policy Challenges

GFSRBy José Viñals

(Versions in 中文FrançaisРусский, and Español)

Today global financial stability is not yet assured and downside risks prevail. Our recommendation is for an urgent upgrade in policies, to avoid downside risks and to achieve our upside scenario of “successful normalization” of monetary and financial conditions. This will secure financial stability and strengthen the economic recovery.

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The New Global Imbalance: Too Much Financial Risk-Taking, Not Enough Economic-Risk Taking

GFSR By José Viñals

(Versions in Español中文)

I have three key messages for you today:

1. Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges.

2. Banks are safer but may not be strong enough to vigorously support the recovery. And risks are shifting to the shadow banking system in the form of rising market and liquidity risks. If left unaddressed, these risks could compromise global financial stability.

3. In order to address this new global imbalance, we must promote economic risk-taking by improving the transmission of monetary policy to the real economy. And we must address financial excesses through better micro- and macroprudential policies.

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Finish the Job on Financial Regulation

GFSRBy José Viñals

Brisbane and Basel may be 10,000 miles apart, but when it comes to financial regulation the two cities will be standing cheek by jowl.

At the next summit of the Group of Twenty advanced and emerging economies, to be held in Brisbane in November, political leaders will take the pulse of the global financial regulatory reform agenda, launched five years ago. The explicit goal of the Australian G-20 presidency is to finally complete these essential reforms. As Prime Minister Tony Abbott said today in Davos, “Financial regulation is always a work-in-progress, but these reforms now need to be finalized in ways that promote confidence without eliminating risk.”

I strongly support this extra push to create a safer financial system that can better support the needs of the real economy, and better protect taxpayers. For far too long, critics have been able to portray the G-20 reform agenda as a regulatory supertanker stuck in the shallow waters of technical complexity, financial industry pushback, and diverging national views. This image is increasingly off the mark.

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Transitions to Financial Stability: A Bumpy Ride

GFSRBy José Viñals

(Versions in 中文Français, 日本語, Русский, and Español)

The global financial system faces several major transitions along the road to greater financial stability.  These transitions will be challenging because they are accompanied by substantial risks.

So what are these transitions?

  • The first one is the transition in the United States from a prolonged period of monetary accommodation towards a normalization of monetary conditions. Will this transition be smooth or bumpy?
  • Second, emerging markets face a transition to more volatile external conditions and higher risk premiums. What needs to be done to keep emerging markets resilient?
  • Third, the euro area is moving to a stronger union and stronger financial systems. This report focuses on the close links between the corporate and banking sectors. What are the implications of the corporate debt overhang for bank health?
  • Fourth, Japan is moving towards the new policy regime of Abenomics. The stakes are high. Will Japan’s policies be comprehensive enough to ensure stability?
  • And finally, there is the global transition to a safer financial system, where much remains to be done.

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“Macro…, what?!” The New Buzz on Financial Stability

When carefully implemented, macroprudential policy can become a cornerstone of financial stability policy. The dictionary of financial lingo has been given an important new entry.

IMF Revises Up Its Global Economic Forecast

The IMF said it had revised upwards its earlier forecast for global growth by ¾ percentage point from the October 2009 forecast. Along with the update to its forecast, the IMF also released a new assessment of global financial conditions in its Global Financial Stability Report (GFSR). It said that financial markets have rebounded since the lows of last March, the result of improving economic conditions and wide-ranging policy actions by governments.

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