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Tag Archives: capital flows

Fit for Purpose—Adapting IMF Advice to a New Economic Landscape

By Fabian Bornhorst and Ceyla Pazarbasioglu عربي, Русский The International Monetary Fund is responding to the policy challenges of a fast-changing global economy still reeling from the COVID-19 crisis: it is modernizing the way it provides its regular policy advice to member countries—a process known as surveillance. The regular health check of members’ economies, known as the Article IV consultations, will continue to cover fiscal, monetary, exchange rate and financial issues, which are at...

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How Rising Interest Rates Could Affect Emerging Markets

  By Philipp Engler, Roberto Piazza and Galen Sher عربي, 中文, Español, Français, 日本語, Português, Русский Rapid vaccine rollout in the United States and passage of its $1.9 trillion fiscal stimulus package have boosted its expected economic recovery. In anticipation, longer-term US interest rates have risen rapidly, with the rate on 10-year Treasury securities going from under 1 percent at the start of the year to over 1.75 percent in mid-March. A similar surge has occurred in the United...

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Will Capital Flows through Global Banks Support Economic Recovery?

Claudia M. Buch, Matthieu Bussière, and Linda S. Goldberg While policymakers around the world have aggressively and swiftly reacted to the common negative economic shock from COVID-19, the timing and forms of policy responses in the economic recovery stage may be more geographically differentiated. The range in policy responses, along with variations in the financial health of banks, likely will affect the flow of international credit through global banks. In this post, we ask whether, based...

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Global Policy Responses to Capital Flow Volatility

By Annamaria De Crescenzio, Annamaria Kokenyne, Dennis Reinhart, and Julia Schmidt The COVID-19 health and economic crisis has once again focused attention on the fickleness of capital flows and the need to have an adequate policy toolkit to manage the risks that stem from these flows, while maximizing their benefits. A virtual workshop organized by the Bank of England, Banque de France, International Monetary Fund and the Organization for Economic Co-operation and Development (OECD)...

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Navigating Capital Flows—An Integrated Approach

By Tobias Adrian, Gita Gopinath, Ceyla Pazarbasioglu عربي, 中文, Español, Français, 日本語, Português, Русский  In a continuous effort to help countries manage volatile cross-border capital flows, the IMF has taken a major step toward a new analytical macroeconomic framework that can guide appropriate policy responses. The work reflects evolving thinking on macroeconomic policy and will feed into the upcoming review of the IMF’s Institutional View on the Liberalization and Management of Capital...

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Global Imbalances and the COVID-19 Crisis

By Martin Kaufman and Daniel Leigh, عربي, 中文, Español, Français, Português, Русский  The world entered the COVID-19 pandemic with persistent, pre-existing external imbalances. The crisis has caused a sharp reduction in trade and significant movements in exchange rates but limited reduction in global current account deficits and surpluses. The outlook remains highly uncertain as the risks of new waves of contagion, capital flow reversals, and a further decline in global trade still loom large...

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Toward an Integrated Policy Framework for Open Economies

By Tobias Adrian and Gita Gopinath While capital mobility provides many benefits, capital flows to emerging market and developing economies are often volatile and depend critically on global financial conditions. The risks posed by volatile capital flows to macroeconomic and financial stability are often difficult to address with conventional monetary policy tools. Hence, policymakers have complemented interest rate policy with additional tools—including foreign exchange intervention, capital...

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Limiting the Economic Fallout of the Coronavirus with Large Targeted Policies

This blog is part of a special series on the response to the coronavirus. By Gita Gopinath This health crisis will have a significant economic fallout, reflecting shocks to supply and demand different from past crises. Substantial targeted policies are needed to support the economy through the epidemic, keeping intact the web of economic and financial relationships between workers and businesses, lenders and borrowers, and suppliers and end-users for activity to recover once the outbreak...

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Countries in the IMF Financial Spotlight in 2020

By IMFBlog In 2020, the IMF plans to assess the stability of twelve financial systems. Seven assessments are of jurisdictions with systemically important financial sectors (Austria, Denmark, Hong Kong SAR, Italy, Korea, Norway, and the United States), for which it is mandatory to undergo financial stability assessments every five years. The other five assessments are Algeria, Latvia, Philippines, South Africa, and Trinidad and Tobago, which are being done at the request of those countries...

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Ensuring the Benefits of Capital Flows in the Middle East

By Jihad Azour and Ling Zhu عربي, Français Since the global financial crisis of 2008, emerging market economies have experienced a surge in capital flows in response to significant monetary easing by major central banks. Gross capital inflows to the Middle East and North Africa (MENA) have remained high compared to other emerging markets, but their composition has changed significantly, with a surge in portfolio flows (equity and bond instruments) and a decline in foreign direct investment....

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