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  • General Financial Markets: General (includes Measurement and Data) x
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Jihad Dagher
Financial crises are traditionally analyzed as purely economic phenomena. The political economy of financial booms and busts remains both under-emphasized and limited to isolated episodes. This paper examines the political economy of financial policy during ten of the most infamous financial booms and busts since the 18th century, and presents consistent evidence of pro-cyclical regulatory policies by governments. Financial booms, and risk-taking during these episodes, were often amplified by political regulatory stimuli, credit subsidies, and an increasing light-touch approach to financial supervision. The regulatory backlash that ensues from financial crises can only be understood in the context of the deep political ramifications of these crises. Post-crisis regulations do not always survive the following boom. The interplay between politics and financial policy over these cycles deserves further attention. History suggests that politics can be the undoing of macro-prudential regulations.
International Monetary Fund. Monetary and Capital Markets Department
This paper presents an assessment of the level of observance of the IOSCO Objectives and Principles of Securities Regulation in China. The regulatory framework and supervisory program for the securities markets is largely compliant with the IOSCO Principles. Since 2010, the authorities have implemented several initiatives aimed at protecting China’s very large retail investor population. On the China Securities Regulatory Commission (CSRC) side, this includes strengthening the suitability requirements for intermediaries, investors’ ability to exercise their rights, and its investor education program. The CSRC has also expanded authorized activities for some categories of securities intermediaries with the objective of developing an investment banking culture to help capital markets serve the real economy better.
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses the findings of the Financial System Stability Assessment for India. Since the 2011 Financial Sector Assessment Program, India has recorded strong growth in both economic activity and financial assets, supported by important structural reforms and terms of trade gains. Increased diversification, commercial orientation, and technology-driven inclusion have supported growth in the financial industry, backed by improved legal, regulatory, and supervisory frameworks. Yet, the financial sector is facing considerable challenges, and economic growth has recently slowed down. High nonperforming assets (NPAs) and slow deleveraging and repair of corporate balance sheets are testing the resilience of the banking system, and holding back investment and growth. The authorities have been pursuing policies to accelerate the process of NPA resolution.
International Monetary Fund. European Dept.
This paper assesses the level of implementation of the International Organization of Securities Commissions objectives and principles of securities regulation in the Russian Federation. The findings reveal that there is much that the Central Bank of Russia needs to accomplish if it is to approach good international practice as a securities regulator. Some of the most recent regulatory changes, such as those on credit rating agencies, are clearly based on international standards. In other areas, further initiatives will be required. These include identification of conflict of interest and improving management standards of professional market participants.
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance report examines regulation of market abuse and issuer disclosure requirements in Ukraine. The Ukrainian regulatory framework for market abuse and issuer disclosure requirements has significant gaps, whose impact is compounded by the National Securities and Stock Market Commission’s (NSSMC) lack of sufficient supervisory, investigative, and enforcement powers. This has contributed to overall lack of transparency and widespread misconduct in the market, including through issuance and trading of “fictitious” securities. To address the current challenges, the Ukrainian legislation needs to be aligned with the international standards to provide the NSSMC with sufficient means to require enhanced disclosures and combat market abuse.
International Monetary Fund. Monetary and Capital Markets Department
This paper presents an assessment of the level of implementation of the IOSCO (International Organization of Securities Commissions) objectives and principles in the Russian Federation. Some of the most recent regulatory changes in the Russian Federation are clearly based on international standards. In other areas, further initiatives will be required. These include conflicts of interest identification and improving standards of management in professional market participants. It will also require the creation of legal gateways which will enable supervisors with the necessary skills sets to provide guidance as to what the Central Bank of the Russian Federation’s (CBR) reasonable expectations are on a range of issues. CBR also faces a major challenge in enforcing the regulatory regime and will need additional resources.
International Monetary Fund. European Dept.
This paper discusses Poland’s performance under the Flexible Credit Line Arrangement. In recent years, Poland’s macroeconomic policies have focused on further strengthening fundamentals and institutional frameworks. Fiscal consolidation has led to an exit from the Excessive Deficit Procedure. Monetary policy has been eased to help lift inflation. Financial sector supervision has been strengthened with a new macroprudential framework. Reserves are broadly adequate against standard metrics. The new government has pledged to maintain prudent policies, including gradual fiscal consolidation over the medium term, and to ensure the continued stability of the banking system. In the period ahead, it will be important to identify specific growth-friendly measures to underpin the fiscal adjustment and reduce implementation risk.