stress tests – IMF Blog

Bank Profitability: Consider the Source

IMFBlog2019-05-01T16:42:23-04:00April 30, 2019|

By Udaibir S. Das, Kun Hu, and TengTeng Xu

The global financial crisis of 2007–2009 and the ensuing period of low interest rates have renewed interest among policy makers in the relationship between bank profitability and financial stability. […]

An Imbalance in Global Banks’ Dollar Funding

IMFBlog2019-03-14T10:32:01-04:00June 12, 2018|

By John Caparusso, Yingyuan Chen, Hideo Hashimoto, David Jones, Will Kerry and Aki Yokoyama

June 12, 2018

Versions in Español, Deutsche, Français, 日本語, Português

The US Treasury is issuing more T-bills, potentially putting upward pressure on the interest rates non-US banks must pay for short-term dollar funding (photo: Jennifer Hack/KRT/Newscom)

For companies and investors outside the United States, the dollar is often the currency of choice. Surprisingly, though, US banks play only a limited role in lending dollars to international borrowers. Most of the $7 trillion in banks’ dollar lending outside the United States is handled by banks based in Europe, Japan and elsewhere. […]

Communications Can Help to Get Financial Stability Off the Ground

IMFBlog2019-03-15T10:25:33-04:00February 22, 2018|

By Olga Stankova

February 22, 2018

Versions in 中文 (Chinese), Español (Spanish), Português (Portuguese), Русский (Russian)

Policy and communications—two wings to fly to success (photo: iStock by Getty Images).

When the capacity to communicate effectively on financial stability policies is not there, it is like trying to fly a plane with one wing missing. It takes more than sound policy making. Communications is an essential part of the job.

Following the global financial crisis, many countries redoubled their efforts to build stronger financial stability frameworks. Central banks and supervisory agencies have enhanced their capacity to identify and monitor systemic risks in the financial system and have developed new policies to mitigate them. […]

European Life Insurers: Unsustainable Business Model

IMFBlog2019-03-27T17:31:38-04:00May 5, 2015|

By Reinout De Bock, Andrea Maechler, and Nobuyasu Sugimoto

(Versions in Français and deutsch)

Low interest rates in the euro area pose substantial challenges to the life insurance industry. Insurers—particularly in Germany and Sweden—offer their clients long-term policies, sometimes more than 30 years, without holding assets of a correspondingly long duration. Moreover, many policies contain generous return guarantees, which are unsustainable in today’s low interest rate environment.

In 2014, stress tests showed European life insurers are vulnerable to a “Japanese-like” scenario.

[…]

Tough Political Decisions Needed to Fix the Financial System

IMFBlog2017-04-15T14:21:50-04:00June 20, 2011|

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.

Government Bonds: No Longer a World Without Risk

IMFBlog2017-04-15T14:27:39-04:00March 24, 2011|

The risk free nature of government bonds, one of the cornerstones of the global financial system, has come into question as the global crisis unfolds. One thing is now very clear: government bonds are no longer the risk-free assets they once were. This carries far reaching implications for policymakers, central bankers, debt managers, and how the demand and supply sides of government bond markets function.

No End in Sight: Early Lessons on Crisis Management

IMFBlog2017-04-15T14:27:59-04:00March 9, 2011|

In times of crisis, choices must be made. In the most recent global economic crisis, policymakers moved quickly to stabilize the system, providing massive financial support, which is the right response in the beginning of any crisis. But that only treated the symptoms of the global financial meltdown, and now a rare opportunity is being thrown away to tackle the underlying causes. In our new paper, we analyze the policy choices made during the crisis and compare them to a number of past ones. It turns out the phases of this crisis followed the same pattern as previous ones, but policymakers made different choices this time around. This post lays out the lessons that we should learn.