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International Monetary Fund. Monetary and Capital Markets Department

Abstract

Developments over the past six months have increased global financial stability risks. Risks have also rotated from advanced economies to emerging markets, from banks to shadow banks, and from solvency to market liquidity risks. The global financial system is being buffeted by a series of changes in financial markets, reflecting diverging growth patterns and monetary policies as global growth prospects have weakened. Disinflationary forces have strengthened as oil and commodity prices have dropped. Although the latter has benefited commodity- and oil-importing countries and increased the room to maneuver for monetary policy in countries with higher inflation, it has increased financial risks in some exporting countries and in the oil sector. As a result of these developments, inflation expectations and long-term bond yields have fallen. Bold monetary policy actions have been taken in both the euro area and Japan to arrest and reverse this disinflation pressure, while the pull of expectations for rising U.S. policy rates and the push of additional monetary stimulus by other major economies have sparked rapid appreciation of the U.S. dollar. Emerging markets are caught in these global cross-currents and face higher financial stability risks, as companies that borrowed heavily on international markets could face balance sheet strains. Additional policy measures are needed to enhance the effectiveness of monetary policies, address crisis legacies, and facilitate sustainable economic risk taking while containing financial excesses across global markets.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Two developments stand out among the changes in international banking since the global financial crisis. First, direct cross-border lending as a share of total banking assets has declined, mostly because of the retrenchment of European banks. Second, the share of local lending by foreign bank affiliates has remained steady. Global banks in particular have refocused their activities on some key markets, leaving space for other banks to expand. As a result, intraregional financial linkages have deepened, especially in Asia.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Financial intermediation through asset management firms has many benefits. It helps investors diversify their assets more easily and can provide financing to the real economy as a “spare tire” even when banks are distressed. The industry also has various advantages over banks from a financial stability point of view.

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
St. Vincent and the Grenadines (SVG) is exposed to money laundering (ML) and financing of terrorism (FT) risk related to drug trafficking and international criminal groups. The financing of terrorism has also been criminalized and is largely in conformity with the Suppression of the Financing of Terrorism (SFT) Convention. The legal and institutional framework regarding the cross-border transportation of cash and bearer instruments is largely in place. The preventive measures regime covers most of the financial and designated nonfinancial businesses and professions (DNFBP) sectors as required under the Financial Action Task Force (FATF) Recommendations.
Marcel Cassard
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.