International Monetary Fund. Monetary and Financial Systems Dept.
The October 2017 Global Financial Stability Report finds that the global financial system continues to strengthen in response to extraordinary policy support, regulatory enhancements, and the cyclical upturn in growth. It also includes a chapter that examines the short- and medium-term implications for economic growth and financial stability of the past decades’ rise in household debt. It documents large differences in household debt-to-GDP ratios across countries but a common increasing trajectory that was moderated but not reversed by the global financial crisis. Another chapter develops a new macroeconomic measure of financial stability by linking financial conditions to the probability distribution of future GDP growth and applies it to a set of 20 major advanced and emerging market economies. The chapter shows that changes in financial conditions shift the whole distribution of future GDP growth.
The April 2014 Global Financial Stability Report finds that, despite much progress, the global financial system remains in a transitional period with stability conditions far from normal. Advanced and emerging market economies alike need to make a successful shift from liquidity- to growth-driven markets, which will require a number of elements, including a normalization of U.S. monetary policy; financial rebalancing in emerging markets; further progress in the euro area integration; and continued implementation of “Abenomics” in Japan. This report also examines how changes in the investor base and financial deepening affect emerging market economies as well as looks at the issue of banks considered too important to fail, providing new estimates of the implicit funding subsidy these banks receive.
International Monetary Fund. Monetary and Capital Markets Department
The October 2012 Global Financial Stability Report (GFSR) finds increased risks to the global financial system, with the euro area crisis the principal source of concern, and urges policymakers to act now to restore confidence, reverse capital flight, and reintegrate the euro zone. This GFSR presents a report on whether regulatory reforms are moving the financial system in the right direction, and finds that progress has been limited, partly because many reforms are in the early stages of implementation and partly because crisis intervention methods are still in use in a number of economies, delaying the movement of the financial system onto a safer path. The final chapter examines whether certain aspects of financial structure enhance economic outcomes. Indeed, some structural features are associated with better outcomes. In particular, financial buffers made up of high-quality capital and truly liquid assets tend to be associated with better economic performance.