Flagships > Global Financial Stability Report

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International Monetary Fund. Monetary and Capital Markets Department

Abstract

The current report finds that, despite an improvement in economic prospects in some key advanced economies, new challenges to global financial stability have arisen. The global financial system is being buffeted by a series of changes, including lower oil prices and, in some cases, diverging growth patterns and monetary policies. Expectations for rising U.S. policy rates sparked a significant appreciation of the U.S. dollar, while long term bond yields in many advanced economies have decreased—and have turned negative for almost a third of euro area sovereign bonds—on disinflation concerns and the prospect of continued monetary accommodation. Emerging markets are caught in these global cross currents, with some oil exporters and other facing new stability challenges, while others have gained more policy space as a result of lower fuel prices and reduced inflationary pressures. The report also examines changes in international banking since the global financial crisis and finds that these changes are likely to promote more stable bank lending in host countries. Finally, the report finds that the asset management industry needs to strengthen its oversight framework to address financial stability risks from incentive problems between end-investors and portfolio managers and the risk of runs due to liquidity mismatches.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The September 2011 Global Financial Stability Report cautions that the risks to global financial stability have increased substantially in recent months, during which heavy public debt burdens and weak growth prospects in many advanced economies combined with a series of shocks to the global financial system. Emerging markets, despite brighter growth prospects, face the risk of sharp reversals and so must guard against the buildup of financial vulnerabilities. Moreover, as the crisis has moved into its fifth year, it has entered a new phase in which political differences within and across economies are impeding progress to address the legacies of the crisis. The Report examines how the ongoing low interest rate environment and high uncertainty are driving the asset allocations of long-term, real-money institutional investors. The Report also looks at variables that can act as advance indicators of financial crisis and examines how the use of countercyclical capital buffers can help to dampen destabilizing cycles.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

This paper describes financial stability considerations related to trends in accounting standards. The paper highlights that in recent years, financial stability is generally viewed by authorities as having improved, in large part through more proactive risk management activities by banks and the related transfer and dispersion of risks from banks to diverse nonbanking institutions, which often have longer-term liability structures. This paper presents a balanced review of the relevant policy issues, and raises questions related to financial stability that policymakers may consider as accounting standards are being reviewed.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

This paper analyzes aspects of global asset allocation. It examines how different institutional investors follow vastly different procedures when allocating assets, reflecting various time horizons, liability structures, and “cultural backgrounds.” It aims to provide some insight into the decision-making process of investors. The paper highlights that understanding the basis for investor decisions is useful when analyzing their asset allocation decisions and related capital flows across borders and asset classes. The paper also discusses the implications for financial stability of proposals and potential changes in accounting policy.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

This paper analyzes developments in the hedge fund industry. The significant growth of hedge funds, driven by institutional investors, has heightened the desire by the official sector to better understand hedge funds and their activities. The paper examines how one may achieve a better understanding of hedge funds and their market activities, particularly for financial stability considerations. The paper reviews and updates developments in the hedge-fund industry since the previous IMF study in 1998, and considers what progress has been made to satisfy various recommendations and proposals from that time.