Review Of The Institutional View On The Liberalization And Management Of Capital Flows Background Note On Assessing Systemic Financial Stability Risks Due To Fx Mismatches

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Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Assessing Systemic Financial Stability Risks Due to FX Mismatches

International Monetary Fund
Review of The Institutional View on The Liberalization and Management of Capital Flows Background Note on Assessing Systemic Financial Stability Risks Due to FX Mismatches Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 18 pages
File Size : 45,9 Mb
Release : 2022-03-30
Category : Business & Economics
ISBN : 9798400206016

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Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Assessing Systemic Financial Stability Risks Due to FX Mismatches by International Monetary Fund Pdf

This note outlines the approach of the proposed revision to the Institutional View (IV) when assessing whether systemic financial stability risks are elevated due to foreign currency (FX) mismatches. The approach builds on the staff guidance regarding risk assessments in bilateral surveillance, while allowing for flexibility to draw on future advances in best practice. This note proposes a two-step approach to assess systemic risks from FX mismatches. This note is organized as follows. Section II outlines the sources of systemic risks stemming from FX debt and potential amplification channels. Section III outlines the risk assessment approach in practice and Section IV concludes.

Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Principles for the Design of Measures to Address Systemic Risks from FX Mismatches

Mr. Heedon Kang,Mr. Paavo A Miettinen,Erlend Nier,Mr. Thorvardur Tjoervi Olafsson,Gurnain Kaur Pasricha
Review of The Institutional View on The Liberalization and Management of Capital Flows Background Note on Principles for the Design of Measures to Address Systemic Risks from FX Mismatches Book PDF

Author : Mr. Heedon Kang,Mr. Paavo A Miettinen,Erlend Nier,Mr. Thorvardur Tjoervi Olafsson,Gurnain Kaur Pasricha
Publisher : International Monetary Fund
Page : 6 pages
File Size : 45,9 Mb
Release : 2022-03-30
Category : Business & Economics
ISBN : 9798400206238

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Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Principles for the Design of Measures to Address Systemic Risks from FX Mismatches by Mr. Heedon Kang,Mr. Paavo A Miettinen,Erlend Nier,Mr. Thorvardur Tjoervi Olafsson,Gurnain Kaur Pasricha Pdf

This note describes the key principles for the design and implementation of preemptive CFM/MPMs. These measures should be designed to be effective—so they achieve their intended goal and are not easily circumvented—and efficient—so they minimize distortions and costs. Preemptive CFM/MPMs should be targeted, calibrated to risks, transparent, and as temporary as possible. The appropriate design depends on country circumstances, such as institutional and legal constraints, as well as the precise source of the vulnerability. Where measures that do not discriminate by residency are available and effective, they should be preferred.

Review of The Institutional View on The Liberalization and Management of Capital Flows

International Monetary Fund
Review of The Institutional View on The Liberalization and Management of Capital Flows Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 98 pages
File Size : 50,7 Mb
Release : 2022-03-30
Category : Business & Economics
ISBN : 9798400204593

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Review of The Institutional View on The Liberalization and Management of Capital Flows by International Monetary Fund Pdf

The Institutional View (IV) on the Liberalization and Management of Capital Flows, adopted in 2012, provides the basis for consistent advice, and where relevant, assessments on policies related to capital flows. This paper reviews the IV, informed by advances in research, notably the work on an Integrated Policy Framework (IPF), the findings of the 2020 evaluation by the Independent Evaluation Office (IEO) on IMF Advice on Capital Flows, and staff’s experience with the implementation of the IV. The core premises and objectives of the IV remain unchanged. The IV rests on the premises that capital flows are desirable as they can bring substantial benefits for countries, and that capital flow management measures (CFMs) can be useful in certain circumstances but should not substitute for warranted macroeconomic adjustment. With those premises in mind, the IV aims to help countries reap the benefits of capital flows, while managing the associated risks in a way that preserves macroeconomic and financial stability and does not generate significant negative outward spillovers.

Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Capital Flows and Capital Flow Management Measures — Benefits and Costs

Gurnain Kaur Pasricha,Erlend Nier
Review of The Institutional View on The Liberalization and Management of Capital Flows Background Note on Capital Flows and Capital Flow Management Measures Benefits and Costs Book PDF

Author : Gurnain Kaur Pasricha,Erlend Nier
Publisher : International Monetary Fund
Page : 23 pages
File Size : 50,6 Mb
Release : 2022-03-30
Category : Business & Economics
ISBN : 9798400205491

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Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Capital Flows and Capital Flow Management Measures — Benefits and Costs by Gurnain Kaur Pasricha,Erlend Nier Pdf

The Fund’s Institutional View (IV) recognizes the benefits of and risks associated with capital flows. Since the IV was adopted, a growing literature has provided additional insights into the benefits and risks from capital flows. This note summarizes the insights from the recent literature and the experiences of staff since the adoption of the IV that have informed this review.

Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Using the IPF Analytical Toolkit to Enhance Policy Assessments

Marcin Kolasa,Gurnain Kaur Pasricha,Mr. Suman S Basu,Ms. Emine Boz,Dimitre Milkov
Review of The Institutional View on The Liberalization and Management of Capital Flows Background Note on Using the IPF Analytical Toolkit to Enhance Policy Assessments Book PDF

Author : Marcin Kolasa,Gurnain Kaur Pasricha,Mr. Suman S Basu,Ms. Emine Boz,Dimitre Milkov
Publisher : International Monetary Fund
Page : 4 pages
File Size : 43,6 Mb
Release : 2022-03-30
Category : Business & Economics
ISBN : 9798400206528

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Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Using the IPF Analytical Toolkit to Enhance Policy Assessments by Marcin Kolasa,Gurnain Kaur Pasricha,Mr. Suman S Basu,Ms. Emine Boz,Dimitre Milkov Pdf

Insights from the IPF workstream can help guide the appropriate policy mix during an inflow surge, based on the shock and country characteristics. Inflow surges may be caused by a range of shocks and can take different forms in different countries. The IPF models suggest that warranted macroeconomic policy adjustments depend on the nature of the shock and country characteristics. The IPF models point to shocks and country characteristics that make it difficult to effectively respond to surges using only macroeconomic policy and exchange rate adjustment. The IPF models also suggest that, in the presence of overheating and overvaluation, the use of FXI and CFMs can enhance monetary autonomy in certain circumstances without generating other distortions. The relative costs and benefits of FXI and CFMs depend on country-specific factors. The IPF models also illustrate how surges can lead to a build-up of systemic financial risks. The IPF workstream connects the appropriate mix of MPMs and CFM/MPMs to the structure of the country's financial system.

Capital Flows - Review of Experience with the Institutional View

International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department,International Monetary Fund. Research Dept.,International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Statistics Dept.
Capital Flows Review of Experience with the Institutional View Book PDF

Author : International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department,International Monetary Fund. Research Dept.,International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Statistics Dept.
Publisher : International Monetary Fund
Page : 61 pages
File Size : 47,6 Mb
Release : 2016-07-11
Category : Business & Economics
ISBN : 9781498345057

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Capital Flows - Review of Experience with the Institutional View by International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department,International Monetary Fund. Research Dept.,International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Statistics Dept. Pdf

Capital flows are an important aspect of the international monetary system. They provide significant benefits, both direct and indirect. At the same time, they also carry risks, and a key challenge for countries is how to harness the benefits while managing the risks. The institutional view on the liberalization and management of capital flows provides the Fund with a basis for consistent advice on policies related to capital flows. This paper reviews countries’ experiences with handling capital flows in the period since the adoption of the IMF’s institutional view in 2012. Based on the experience, it identifies a few areas in which the view would benefit from further clarification or elaboration.

Guidance Note for the Liberalization and Management of Capital Flows

International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department
Guidance Note for the Liberalization and Management of Capital Flows Book PDF

Author : International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 33 pages
File Size : 52,6 Mb
Release : 2013-04-25
Category : Business & Economics
ISBN : 9781498341929

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Guidance Note for the Liberalization and Management of Capital Flows by International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department Pdf

This note provides operational guidance to staff for how to use the Fund’s institutional view on the liberalization and management of capital flows. The institutional view is a consistent basis for providing policy advice on capital flows and policies related to them and assessments when required for surveillance. In the absence of an institutional view, country teams risk providing inconsistent advice to countries in similar circumstances (IEO, 2005). The view does not have mandatory implications for Fund-supported programs or technical assistance. It does not alter members’ rights and obligations under the Fund’s Articles of Agreement or under any other international agreements. The institutional view and guidance will evolve over time to reflect new experience, emerging views of authorities and staff, and research. Staff teams are encouraged to reflect useful lessons from authorities’ experiences with capital flow liberalization and management in Fund reports so that these experiences can continue to influence the Fund’s approach to these issues.

The Liberalization and Management of Capital Flows - An Institutional View

International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department
The Liberalization and Management of Capital Flows An Institutional View Book PDF

Author : International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 49 pages
File Size : 48,9 Mb
Release : 2012-04-11
Category : Business & Economics
ISBN : 9781498339612

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The Liberalization and Management of Capital Flows - An Institutional View by International Monetary Fund. Strategy, Policy, & Review Department,International Monetary Fund. Legal Dept.,International Monetary Fund. Monetary and Capital Markets Department Pdf

Capital flows have increased significantly in recent years and are a key aspect of the global monetary system. They offer potential benefits to countries, but their size and volatility can also pose policy challenges. The Fund needs to be in a position to provide clear and consistent advice with respect to capital flows and policies related to them. In 2011, the International Monetary and Financial Committee (IMFC) called for ?further work on a comprehensive, flexible, and balanced approach for the management of capital flows.? This paper proposes an institutional view to underpin this approach, drawing on earlier Fund policy papers, analytical work, and Board discussions on capital flows.

Integrated Policy Framework—Principles for the Use of Foreign Exchange Intervention

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
Integrated Policy Framework Principles for the Use of Foreign Exchange Intervention Book PDF

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 : 48,7 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.

Systemwide Liquidity Stress Testing Tool

Ms. Hiroko Oura
Systemwide Liquidity Stress Testing Tool Book PDF

Author : Ms. Hiroko Oura
Publisher : International Monetary Fund
Page : 54 pages
File Size : 54,8 Mb
Release : 2022-12-16
Category : Business & Economics
ISBN : 9798400227585

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Systemwide Liquidity Stress Testing Tool by Ms. Hiroko Oura Pdf

Developing a systemic liquidity stress testing tool is challenging due to data constraints and hard-to-model behavioral factors. There has yet to be a uniformly accepted model partly because the nature of systemic liquidity risks differs significantly across countries. This paper offers a simple Excel-based tool to assess the high-level impact of aggregate liquidity stress on the whole economy and gauge its spillover across banks, non-bank financial institutions (NBFIs), and non-financial economic sectors. It primarily uses the balance sheet approach (BSA) data—a sector-aggregate matrix of financial exposure by counterpart—that have become increasingly available for various economies with all income levels. The results can identify systemically important financial linkages to be analyzed further and help calibrate macroprudential measures and a liquidity support framework. When liquidity stress stems from capital outflows, the tool can enrich policy discussion based on integrated policy framework (IPF) and international reserve adequacy perspectives.

Staff Guidance Note on Macroprudential Policy

International Monetary Fund
Staff Guidance Note on Macroprudential Policy Book PDF

Author : International Monetary Fund
Publisher : International Monetary Fund
Page : 45 pages
File Size : 45,5 Mb
Release : 2014-06-11
Category : Business & Economics
ISBN : 9781498342629

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Staff Guidance Note on Macroprudential Policy by International Monetary Fund Pdf

This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries

Canada

International Monetary Fund. Monetary and Capital Markets Department
Canada Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 85 pages
File Size : 54,9 Mb
Release : 2019-06-24
Category : Business & Economics
ISBN : 9781498321112

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Canada by International Monetary Fund. Monetary and Capital Markets Department Pdf

This Financial System Stability Assessment paper discusses that Canada has enjoyed favorable macroeconomic outcomes over the past decades, and its vibrant financial system continues to grow robustly. However, macrofinancial vulnerabilities—notably, elevated household debt and housing market imbalances—remain substantial, posing financial stability concerns. Various parts of the financial system are directly exposed to the housing market and/or linked through housing finance. The financial system would be able to manage severe macrofinancial shocks. Major deposit-taking institutions would remain resilient, but mortgage insurers would need additional capital in a severe adverse scenario. Housing finance is broadly resilient, notwithstanding some weaknesses in the small non-prime mortgage lending segment. Although banks’ overall capital buffers are adequate, additional required capital for mortgage exposures, along with measures to increase risk-based differentiation in mortgage pricing, would be desirable. This would help ensure adequate through-the cycle buffers, improve mortgage risk-pricing, and limit procyclical effects induced by housing market corrections.

Key Aspects of Macroprudential Policy - Background Paper

International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department
Key Aspects of Macroprudential Policy Background Paper Book PDF

Author : International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 64 pages
File Size : 45,9 Mb
Release : 2013-10-06
Category : Business & Economics
ISBN : 9781498341714

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Key Aspects of Macroprudential Policy - Background Paper by International Monetary Fund. Fiscal Affairs Dept.,International Monetary Fund. Monetary and Capital Markets Department Pdf

The countercyclical capital buffer (CCB) was proposed by the Basel committee to increase the resilience of the banking sector to negative shocks. The interactions between banking sector losses and the real economy highlight the importance of building a capital buffer in periods when systemic risks are rising. Basel III introduces a framework for a time-varying capital buffer on top of the minimum capital requirement and another time-invariant buffer (the conservation buffer). The CCB aims to make banks more resilient against imbalances in credit markets and thereby enhance medium-term prospects of the economy—in good times when system-wide risks are growing, the regulators could impose the CCB which would help the banks to withstand losses in bad times.

Toward an Integrated Policy Framework

International Monetary Fund
Toward an Integrated Policy Framework Book PDF

Author : International Monetary Fund
Publisher : INTERNATIONAL MONETARY FUND
Page : 54 pages
File Size : 42,7 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.

Macro-Prudential Policies to Mitigate Financial System Vulnerabilities

Mr.Stijn Claessens,Swati R. Ghosh,MissRoxana Mihet
Macro Prudential Policies to Mitigate Financial System Vulnerabilities Book PDF

Author : Mr.Stijn Claessens,Swati R. Ghosh,MissRoxana Mihet
Publisher : International Monetary Fund
Page : 36 pages
File Size : 51,7 Mb
Release : 2014-08-19
Category : Business & Economics
ISBN : 9781498357609

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Macro-Prudential Policies to Mitigate Financial System Vulnerabilities by Mr.Stijn Claessens,Swati R. Ghosh,MissRoxana Mihet Pdf

Macro-prudential policies aimed at mitigating systemic financial risks have become part of the policy toolkit in many emerging markets and some advanced countries. Their effectiveness and efficacy are not well-known, however. Using panel data regressions, we analyze how changes in balance sheets of some 2,800 banks in 48 countries over 2000–2010 respond to specific macro-prudential policies. Controlling for endogeneity, we find that measures aimed at borrowers––caps on debt-to-income and loan-to-value ratios––and at financial institutions––limits on credit growth and foreign currency lending––are effective in reducing asset growth. Countercyclical buffers are little effective through the cycle, and some measures are even counterproductive during downswings, serving to aggravate declines, consistent with the ex-ante nature of macro-prudential tools.