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International Monetary Fund. Monetary and Capital Markets Department

Abstract

The following remarks by the Acting Chair were made at the conclusion of the Executive Board's discussion of the Global Financial Stability Report on March 14, 2003.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The following remarks by the Acting Chair were made at the conclusion of the Executive Board’s discussion of the Global Financial Stability Report on March 30, 2009.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Despite ongoing monetary policy normalization in some advanced economies and some signs of firming inflation, global financial conditions are still very accommodative relative to historical norms. Although supportive of near-term growth, easy financial conditions also continue to facilitate a buildup of financial fragilities, increasing risks to global financial stability and economic growth over the medium term.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The global economic expansion continues but it has become less even. While global financial conditions remain broadly accommodative and supportive of growth in the near term, financial conditions in some emerging market economies have tightened since the April 2018 Global Financial Stability Report (GFSR). This tightening has been driven by a combination of country-specific factors, worsening external financing conditions, and trade tensions. As a result, near-term risks to financial stability have increased modestly, while medium-term risks remain elevated because of persistent financial vulnerabilities linked to high debt levels and stretched asset valuations. Looking ahead, a further escalation of trade tensions, as well as rising geopolitical risks and policy uncertainty in major economies, could lead to a sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Global financial stability has improved since the October 2012 report. Policy actions have eased monetary and financial conditions and reduced tail risks, leading to a sharp increase in risk appetite and a rally in asset prices. But if progress on addressing medium-term challenges falters, the rally in financial markets may prove unsustainable, risks could reappear, and the global financial crisis could morph into a more chronic phase.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

What began as a fairly contained deterioration in portions of the U.S. subprime market has metastasized into severe dislocations in broader credit and funding markets that now pose risks to the macroeconomic outlook in the United States and globally. This chapter first examines the deepening of losses in the U.S. subprime mortgage market and the potential breadth of credit deterioration amid significant economic slowing along with declines in real estate prices. Estimates of potential losses and an analysis of their systemic effects are discussed next, including the potential reverberations through financial guarantors, and spill-overs to emerging market countries. The linkages through the credit channel to output growth are empirically examined and two potential downside scenarios are explored. Against the backdrop of continued weakness in global credit markets and threats to financial stability, the chapter concludes with some immediate policy measures to help foster counterparty confidence and to contain further downside risks.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Financial risks have increased and underlying conditions have worsened since the April 2007 Global Financial Stability Report (GFSR). The period ahead may be difficult, as bouts of turbulence are likely to recur and the adjustment process will take some time. Uncertainty about the final size of losses, and when and where they will be revealed, will likely continue to keep market sentiment and conditions unsettled in the near term. This chapter outlines a number of the causes and consequences of the recent episode of turmoil and offers some initial thoughts on possible responses that the private and public sectors might consider to help improve global financial resilience.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The global financial system has undergone a period of unprecedented turmoil. Market confidence dwindled and has remained fragile, leading to the collapse or near-collapse of large, and in some cases systemically important, financial institutions, and calling forth public intervention in the financial system on a scale not seen for decades. The financial system has been severely weakened by mounting losses on impaired and illiquid assets, uncertainty regarding the availability and cost of funding, and further deterioration of loan portfolios as global economic growth slows. Finding a purely private sector resolution of financial market strains has become increasingly difficult, while case-by-case intervention by authorities has not alleviated market concerns. In response, more comprehensive approaches are now being considered or implemented to bring about a more orderly process of deleveraging and to break the adverse feedback loop between the financial system and the global economy. Such a comprehensive approach—if well coordinated among countries—should be sufficient to restore confidence and the proper functioning of markets and avert a more protracted downturn in the global economy.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Despite the ongoing economic recovery, the global financial system remains in a period of significant uncertainty. The baseline scenario is for balance sheets to strengthen gradually as the economy recovers, and as further progress is made in addressing legacy problems in key banking systems. However, substantial downside risks remain. Mature market governments face the difficult challenge of managing a smooth transition to self-sustaining growth, while stabilizing debt burdens under low and uncertain economic prospects. Without further bolstering of balance sheets, banking systems remain susceptible to funding shocks that could intensify deleveraging pressures and place a further drag on public finances and the recovery. Emerging market economies have proven resilient to recent turbulence, but are vulnerable to a slowdown in mature markets and face risks in managing sizable and potentially volatile capital inflows. Policy actions need to be intensified to contain risks in advanced and emerging economies, address sovereign debt burdens, tackle the legacy challenges of the crisis for the banking system, and put in place a new regulatory and institutional landscape to ensure financial stability.