Integrated Policy Framework Principles For The Use Of Foreign Exchange Intervention

Author : International Monetary Fund. Monetary and Capital Markets Department,International Monetary Fund. Research Dept.,International Monetary Fund. Institute for Capacity Development,International Monetary Fund. Strategy, Policy, & Review Department
Publisher : International Monetary Fund
Page : 61 pages
File Size : 48,5 Mb
Release : 2023-12-21
Category : Business & Economics
ISBN : 9798400263842

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Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention by International Monetary Fund. Monetary and Capital Markets Department,International Monetary Fund. Research Dept.,International Monetary Fund. Institute for Capacity Development,International Monetary Fund. Strategy, Policy, & Review Department Pdf

This note guides policy advice on the use of foreign exchange intervention (FXI) as part of the Integrated Policy Framework (IPF) in Fund surveillance. The note provides general principles for the advice in countries with flexible exchange rates and sets out three use cases for FXI that are tied to specific frictions. It explores the use of FXI as part of an overall policy response, allowing the advice to differ with shocks, frictions, and country-specific circumstances.

Author : Mr.Suman S Basu,Ms.Emine Boz,Ms.Gita Gopinath,Mr.Francisco Roch,Ms.Filiz D Unsal
Publisher : International Monetary Fund
Page : 157 pages
File Size : 50,7 Mb
Release : 2020-07-07
Category : Business & Economics
ISBN : 9781513549729

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A Conceptual Model for the Integrated Policy Framework by Mr.Suman S Basu,Ms.Emine Boz,Ms.Gita Gopinath,Mr.Francisco Roch,Ms.Filiz D Unsal Pdf

In the Mundell-Fleming framework, standard monetary policy and exchange rate flexibility fully insulate economies from shocks. However, that framework abstracts from many real world imperfections, and countries often resort to unconventional policies to cope with shocks, such as COVID-19. This paper develops a model of optimal monetary policy, capital controls, foreign exchange intervention, and macroprudential policy. It incorporates many shocks and allows countries to differ across the currency of trade invoicing, degree of currency mismatches, tightness of external and domestic borrowing constraints, and depth of foreign exchange markets. The analysis maps these shocks and country characteristics to optimal policies, and yields several principles. If an additional instrument becomes available, it should not necessarily be deployed because it may not be the right tool to address the imperfection at hand. The use of a new instrument can lead to more or less use of others as instruments interact in non-trivial ways.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 74 pages
File Size : 40,6 Mb
Release : 2015-10-23
Category : Business & Economics
ISBN : 9781498344067

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Evolving Monetary Policy Frameworks in Low-Income and Other Developing Countries by International Monetary Fund Pdf

Over the past two decades, many low- and lower-middle income countries (LLMICs) have improved control over fiscal policy, liberalized and deepened financial markets, and stabilized inflation at moderate levels. Monetary policy frameworks that have helped achieve these ends are being challenged by continued financial development and increased exposure to global capital markets. Many policymakers aspire to move beyond the basics of stability to implement monetary policy frameworks that better anchor inflation and promote macroeconomic stability and growth. Many of these LLMICs are thus considering and implementing improvements to their monetary policy frameworks. The recent successes of some LLMICs and the experiences of emerging and advanced economies, both early in their policy modernization process and following the global financial crisis, are valuable in identifying desirable features of such frameworks. This paper draws on those lessons to provide guidance on key elements of effective monetary policy frameworks for LLMICs.

Author : International Monetary Fund
Publisher : INTERNATIONAL MONETARY FUND
Page : 54 pages
File Size : 48,6 Mb
Release : 2020-10-08
Category : Business & Economics
ISBN : 1513558765

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Toward an Integrated Policy Framework by International Monetary Fund Pdf

Policymakers often face difficult tradeoffs in pursuing domestic and external stabilization objectives. The paper reflects staff’s work to advance the understanding of the policy options and tradeoffs available to policymakers in a systematic and analytical way. The paper recognizes that the optimal path of the IPF tools depends on structural characteristics and fiscal policies. The operational implications of IPF findings require careful consideration. Developing safeguards to minimize the risk of inappropriate use of IPF policies will be essential. Staff remains guided by the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 105 pages
File Size : 48,9 Mb
Release : 2013-12-15
Category : Business & Economics
ISBN : 9781484366806

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Annual Report on Exchange Arrangements and Exchange Restrictions 2013 by International Monetary Fund. Monetary and Capital Markets Department Pdf

This is the 64th issue of the AREAER. It provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls of all IMF member countries. It also provides information on the operation of foreign exchange markets and controls on international trade. It describes controls on capital transactions and measures implemented in the financial sector, including prudential measures. In addition, it reports on exchange measures imposed by member countries for security reasons. A single table provides a snapshot of the exchange and trade systems of all IMF member countries. The Overview describes in detail how the general trend toward foreign exchange liberalization continued during 2012, alongside a strengthening of the financial sector regulatory framework. The AREAER is available in several formats. The Overview in print and online, and the detailed information for each of the 191 member countries and territories is included on a CD that accompanies the printed Overview and in an online database, AREAER Online. In addition to the information on the exchange and trade system of IMF member countries in 2012, AREAER Online contains historical data published in previous issues of the AREAER. It is searchable by year, country, and category of measure and allows cross country comparisons for time series.

Author : Mr. Tobias Adrian,Vitor Gaspar,Mr. Francis Vitek
Publisher : International Monetary Fund
Page : 99 pages
File Size : 46,9 Mb
Release : 2022-01-28
Category : Business & Economics
ISBN : 9781616359706

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A Medium-Scale DSGE Model for the Integrated Policy Framework by Mr. Tobias Adrian,Vitor Gaspar,Mr. Francis Vitek Pdf

This paper jointly analyzes the optimal conduct of monetary policy, foreign exchange intervention, fiscal policy, macroprudential policy, and capital flow management. This policy analysis is based on an estimated medium-scale dynamic stochastic general equilibrium (DSGE) model of the world economy, featuring a range of nominal and real rigidities, extensive macrofinancial linkages with endogenous risk, and diverse spillover transmission channels. In the pursuit of inflation and output stabilization objectives, it is optimal to adjust all policies in response to domestic and global financial cycle upturns and downturns when feasible—including foreign exchange intervention and capital flow management under some conditions—to widely varying degrees depending on the structural characteristics of the economy. The framework is applied empirically to four small open advanced and emerging market economies.

Author : Romain Lafarguette,Mr.Romain M Veyrune
Publisher : International Monetary Fund
Page : 33 pages
File Size : 45,8 Mb
Release : 2021-02-12
Category : Business & Economics
ISBN : 9781513569406

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Foreign Exchange Intervention Rules for Central Banks: A Risk-based Framework by Romain Lafarguette,Mr.Romain M Veyrune Pdf

This paper presents a rule for foreign exchange interventions (FXI), designed to preserve financial stability in floating exchange rate arrangements. The FXI rule addresses a market failure: the absence of hedging solution for tail exchange rate risk in the market (i.e. high volatility). Market impairment or overshoot of exchange rate between two equilibria could generate high volatility and threaten financial stability due to unhedged exposure to exchange rate risk in the economy. The rule uses the concept of Value at Risk (VaR) to define FXI triggers. While it provides to the market a hedge against tail risk, the rule allows the exchange rate to smoothly adjust to new equilibria. In addition, the rule is budget neutral over the medium term, encourages a prudent risk management in the market, and is more resilient to speculative attacks than other rules, such as fixed-volatility rules. The empirical methodology is backtested on Banco Mexico’s FXIs data between 2008 and 2016.

Author : Laurent Kemoe,Moustapha Mbohou,Hamza Mighri,Mr. Saad N Quayyum
Publisher : International Monetary Fund
Page : 36 pages
File Size : 50,8 Mb
Release : 2024-03-15
Category : Business & Economics
ISBN : 9798400269264

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Effect of Exchange Rate Movements on Inflation in Sub-Saharan Africa by Laurent Kemoe,Moustapha Mbohou,Hamza Mighri,Mr. Saad N Quayyum Pdf

This paper provides new evidence on the exchange rate passthrough to domestic inflation in Sub-Saharan Africa (SSA) using both bilateral US dollar exchange rate and the nominal effective exchange rate (NEER), and monthly data. We find that depreciations cause sizable increases in domestic inflation. The passthrough in SSA is higher than in other regions and its magnitude depends on the exchange rate regime, type of exchange rate (bilateral versus NEER), natural resource endowment and domestic market competitiveness. The passthrough is found to be disproportionately larger and more persistent for large depreciation shocks, and for exchange rate changes that are more persistent. We also find evidence of asymmetry, with passthrough eight times stronger during depreciations than appreciations. Additional findings suggest that improved monetary policy effectiveness is an important driver of our observed declining estimates of exchange rate passthrough over time, supporting the long-standing view that strengthening monetary policy frameworks and credibility helps mitigate the impact of depreciations on inflation.

Author : International Monetary Fund. Western Hemisphere Dept.
Publisher : International Monetary Fund
Page : 127 pages
File Size : 46,7 Mb
Release : 2023-03-27
Category : Business & Economics
ISBN : 9798400238673

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Peru by International Monetary Fund. Western Hemisphere Dept. Pdf

Against the background of a strong economic performance over the last quarter of a century, Peru has been hit by multiple shocks in the last several years. Adequate policies and very strong policy frameworks have made the economy resilient. Following a steep decline in 2020 at the outset of the pandemic and a rapid recovery in 2021, growth slowed significantly in 2022 as the policy stimulus was withdrawn and external and financial conditions deteriorated. Recent political developments suggest that the new government needs to work across the political spectrum to create broader political consensus, reduce uncertainty, ease social tensions, and boost growth.

Author : Banco de Pagos Internacionales (Basilea, Suiza). Departamento Monetario y Económico
Publisher : Unknown
Page : 0 pages
File Size : 55,5 Mb
Release : 2013
Category : Banks and banking, Central
ISBN : 9291319627

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Market Volatility and Foreign Exchange Intervention in EMEs by Banco de Pagos Internacionales (Basilea, Suiza). Departamento Monetario y Económico Pdf

Author : Mr.Tobias Adrian,Christopher J. Erceg,Jesper Lindé,Pawel Zabczyk,Ms.Jianping Zhou
Publisher : International Monetary Fund
Page : 56 pages
File Size : 49,5 Mb
Release : 2020-07-07
Category : Business & Economics
ISBN : 9781513549668

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A Quantitative Model for the Integrated Policy Framework by Mr.Tobias Adrian,Christopher J. Erceg,Jesper Lindé,Pawel Zabczyk,Ms.Jianping Zhou Pdf

Many central banks have relied on a range of policy tools, including foreign exchange intervention (FXI) and capital flow management tools (CFMs), to mitigate the effects of volatile capital flows on their economies. We develop an empirically-oriented New Keynesian model to evaluate and quantify how using multiple policy tools can potentially improve monetary policy tradeoffs. Our model embeds nonlinear balance sheet channels and includes a range of empirically-relevant frictions. We show that FXI and CFMs may improve policy tradeoffs under certain conditions, especially for economies with less well-anchored inflation expectations, substantial foreign currency mismatch, and that are more vulnerable to shocks likely to induce capital outflows and exchange rate pressures.

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 34 pages
File Size : 42,9 Mb
Release : 2004-08-16
Category : Business & Economics
ISBN : 1589062604

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Guidelines for Foreign Exchange Reserve Management by International Monetary Fund Pdf

These guidelines are intended to assist countries in strengthening their policy frameworks for reserve management so that they can become more resilient to shocks that may originate from global financial markets or within the domestic financial system. The guidelines have been developed as part of a broader IMF work program to help strengthen international financial architecture, to promote policies and practices that contribute to stability and transparency in the financial sector, and to reduce external vulnerabilities of member countries.

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 40 pages
File Size : 46,8 Mb
Release : 2013-01-02
Category : Business & Economics
ISBN : 9781498342377

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Revised Guidelines for Foreign Exchange Reserve Management by International Monetary Fund. Monetary and Capital Markets Department Pdf

The 2013 revision of the Guidelines was carried out by the IMF staff, supported by a small Working Group of central banks and monetary authorities from China, India, Israel, Italy, Mexico, Japan, Russia, Saudi Arabia, Switzerland, the European Central Bank, and the Bank for International Settlements, and The World Bank acting as reviewer in the process. Mr. Franco Passacantando, Managing Director at the Bank of Italy, chaired this Working Group. The revisions to the Guidelines mainly concentrate on: (i) reserve management objectives and strategy, including analyzing and managing risks in the context of reserve diversification; (ii) transparency and accountability, while avoiding reserve management decisions being dictated by the prevailing accounting framework; (iii) institutional and organizational framework issues, especially on avoiding possible inconsistencies between reserve management and other central bank operations; and (iv) the risk management framework, including taking into account ex-ante assessments of the impact of reserve investments on financial markets and building internal credit risk assessment systems to assess counterparty risks

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 128 pages
File Size : 47,7 Mb
Release : 2016-11-11
Category : Business & Economics
ISBN : 9781498395748

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Annual Report on Exchange Arrangements and Exchange Restrictions 2016 by International Monetary Fund. Monetary and Capital Markets Department Pdf

The AREAER provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls of all IMF Member countries.

Author : Robert Triffin
Publisher : Unknown
Page : 104 pages
File Size : 49,9 Mb
Release : 1964
Category : Business & Economics
ISBN : UOM:49015001169599

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The Evolution of the International Monetary System by Robert Triffin Pdf