Analysis and Plans, presents an assessment of 1997 survey data and a summary of improvements introduced, as a result of countries' participation in the 1997 Coordinated Portfolio Investment Survey, into national systems for collecting data on international (cross-border) portfolio investment The chapter reviews developments that occurred in international financial markets in the 1980s and 1990s, and the Godeaux Report assessment and recommendations about global data on international portfolio investment flows and stocks. The objectives set for the 1997 survey, the scope of survey results, and the process by which results have been assessed in the chapter. Since publication of the Godeaux Report, substantial expansion and evolution have occurred in exchange and over-the-counter markets for financial derivatives covering a range of financial risks. These markets now have the capacity, in effect, to change the currencies, maturities, and marketability of the financial instruments underlying associated derivative contracts. It is recommended that vigorous efforts should be made to secure the participation of more major investing countries in order to address the under-reporting of global portfolio investment assets and to confirm the reliability of the global data on portfolio investment liabilities.
International Monetary Fund. External Relations Dept.
Public Information Notices (PINs) are IMF Executive Board assessments of members’ economic prospects and policies issued following Article IV consultations—with the consent of the member—with background on the members’ economies and following policy discussions in the Executive Board at the decision of the Board. Recently issued PINs include
The rapid integration of international financial markets—under which the economic developments and policy decisions of one country may affect many other countries—underscores the importance of IMF surveillance to ensure that the international monetary system operates effectively and that each member observes the obligations set forth in the IMF’s Articles of Agreement. This report forms part of the IMF’s multilateral surveillance aimed at reviewing and analyzing progress in promoting a stable system of exchange rates and orderly exchange arrangements among its member countries.1
This chapter reviews country experiences in the use of different exchange rate regimes and their trends since 1990, and discusses some of the factors underlying these trends. It analyzes the evolution of exchange rate regimes based on de facto policies, which have formed the basis of the IMF’s official exchange rate regime classifications since January 1999. This system classifies exchange rate regimes based on the degree of commitment to a given exchange rate path and not necessarily on the degree of flexibility of the exchange rate. It also adds a new dimension by placing members’ exchange rate regimes in their overall monetary policy framework (see Box 2.1). The de facto classification has been backdated to 1990, while providing more details on some regime categories (Figure 2.1).1
Momentum toward currency convertibility has diminished since 1997, when a series of emerging market crises occurred.1 IMF members have continued eliminating—albeit at a slower pace—exchange restrictions on the making of payments and transfers for current international transactions subject to the IMF’s jurisdiction under Article VIII or maintained under the transitional arrangements of Article XIV (Box 3.1). Progress toward liberalization of the broader range of exchange controls on both current and capital account transactions, however, appears to have been limited. This assessment is based on the number of countries maintaining exchange restrictions and controls and does not necessarily reflect the degree of effectiveness of restrictions and controls, which depends critically on their design and on the degree of regulatory enforcement.2 Moreover, changes in the number of restrictions and controls need to be interpreted with caution in light of improved reporting by members and the greater coverage of foreign exchange and cross-border transactions in the Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), a major source of information for this report.