Based on technical assistance to central banks by the IMF’s Monetary and Capital Markets Department and Information Technology Department, this paper examines fintech and the related area of cybersecurity from the perspective of central bank risk management. The paper draws on findings from the IMF Article IV Database, selected FSAP and country cases, and gives examples of central bank risks related to fintech and cybersecurity. The paper highlights that fintech- and cybersecurity-related risks for central banks should be addressed by operationalizing sound internal risk management by establishing and strengthening an integrated risk management approach throughout the organization, including a dedicated risk management unit, ongoing sensitizing and training of Board members and staff, clear reporting lines, assessing cyber resilience and security posture, and tying risk management into strategic planning.. Given the fast-evolving nature of such risks, central banks could make use of timely and regular inputs from external experts.
This paper assesses the status of financial development in Emerging Europe, analyzes the factors that have shaped it, and discusses policy priorities. Financial development has progressed to varying degrees across the region. Macroeconomic stability and institutional quality have been important factors. Going forward, the EU integration process is likely to propel further reforms and shape financial development in EU members. In non-EU emerging economies the focus should be on maintaining macroeconomic stability and strengthening law enforceability. Creating a well-functioning government securities market, reinforcing corporate governance and creditor rights protection, and promoting the emergence of institutional investors would be beneficial.
Mr. Torbjorn I. Becker, Mr. Anthony J. Richards, and Mr. Yunyong Thaicharoen
Many official groups have endorsed the wider use by emerging market borrowers of contract clauses which allow for a qualified majority of bondholders to restructure repayment terms in the event of financial distress. Some have argued that such clauses will be associated with moral hazard and increased borrowing costs. This paper addresses this question empirically using primary and secondary market yields and finds no evidence that the presence of collective action clauses increases yields for either higher- or lower-rated issuers. By implication, the perceived benefits from easier restructuring are at least as large as any costs from increased moral hazard.