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International Monetary Fund. External Relations Dept.

Abstract

This paper highlights the exchange rate for the pound sterling soon after it began to float, moved within a relatively narrow range in relation to other major currencies and unrest in the exchange markets moderated. In some countries, such as Australia and Spain, where outward capital movements were still subject to considerable restrictions, these were relaxed to various extents. In a number of primary producing as well as industrial countries, the control of inward capital movements was motivated not by their immediate balance of payments impact but by concern over the extent of foreign ownership of certain sectors of the economy. Contrary to expectations, the monetary unrest remained and capital movements increased. After moderating somewhat in the second half of 1972, late in the period gold prices started to rise again, and they reached new peaks in early 1973. Guatemala, Hong Kong, and Kuwait abolished exchange control. Germany, invoking Article 23 of the Foreign Trade and Payments Law, restricted additional types of capital transactions between residents and nonresidents in order to ward off capital inflows.

International Monetary Fund. External Relations Dept.

Abstract

Annual Report on Exchange Arrangements and Exchange Restrictions 1950

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Developments since the September 2006 Global Financial Stability Report (GFSR) have been broadly in line with the baseline scenario of solid economic growth, while near-term economic risks have eased. However, changes in underlying financial risks and conditions in some areas require heightened surveillance. This chapter discusses those changes in risks and conditions, and introduces the global financial stability map, a tool for assessing and summarizing how financial risks have evolved.

Donald J. Mathieson and Jorge E. Roldos

Abstract

The development of local securities and derivatives markets is just one response of many emerging markets to global volatility since the mid-1990s, particularly the sudden losses of access to international capital markets and periods of high global asset price volatility. This chapter analyzes key policy issues related to the role of these markets as an alternative source of funding for sovereign and corporate entities and a means of attracting foreign capital inflows. Subsequent chapters examine the development of local bond, equity, and derivatives markets in emerging markets.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Investor sentiment deteriorated further in the third quarter, continuing the trend reported in previous issues of the Global Financial Stability Report. Uncertainty and then concern mounted over the strength and durability of the global economic recovery, the prospects for corporate profits, and geopolitical conditions. Financial market developments during the period under review can be characterized by heightened investor risk aversion that was reflected in a pronounced tiering by credit quality. Higher-risk corporate and sovereign borrowers continued to face difficult financing conditions.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Cross-border financial asset accumulation has tripled over the past decade. While some of this increase represents a continuation or resumption of trends that have been evident for some time, recent years have witnessed several new developments, notably the broadening of the investor base eager to hold international assets. Certain classes of investors, such as private institutional investors from mature market (MM) economies and official institutions from emerging market (EM) economies, have gained in importance in global financial markets.

Jorge E. Roldos

Abstract

A key policy prescription for fending off financial crises in emerging markets has been the development of local bond markets, and this strategy has been embraced by a number of policymakers and international organizations (see World Bank and IMF, 2001). From a macro-economic perspective, local bond markets could soften the impact of lost access to international capital markets or bank credit by providing an alternative source of funding.40 From a microeconomic perspective, they could help create a wider menu of instruments to deal with inherent currency and maturity mismatches in emerging markets (see Eichengreen and Hausmann, 1999: and HKMA, 2001).

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The global financial system has experienced a number of challenges: economic recessions and growth slowdowns in various countries, the bursting of the technology, media, and telecom (TMT) bubble and more widespread equity price declines, uncertainty created by corporate accounting irregularities, and significant financial losses in the key sectors of the global economic and financial system. A considerable retrenchment of risk taking has accompanied these adjustments, reflecting heightened perceptions of risk or risk aversion and the unwinding of some of the excesses of the bubble period.1 Remarkably, the global financial system has remained resilient and financial stability has so far been maintained. This resilience is attributable to several factors: progress made in strengthening financial infrastructures in the major international financial centers; advances by financial institutions in pricing and managing financial risks; and the increased ability—through information and computer technologies—to repackage and distribute financial risks more broadly.

Ramana Ramasamy

Abstract

One of the key issues in developing local securities markets as a stable source of funding for corporates is the development of an adequate domestic and international investor base. The scale and stability of that investor base will be influenced fundamentally by the nature of the returns and portfolio diversification benefits associated with holding local securities. This chapter therefore analyzes emerging market equities from two perspectives. First, it looks at the performance of this asset class from the perspective of global investors and considers how this performance may affect the scale and volatility of equity-related capital flows. Second, it examines emerging market equities as an alternative source of finance for the corporate sector, and analyzes how equity issuance in emerging markets has fared in relation to bank financing.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Emerging market investor sentiment deteriorated sharply during the third quarter, and the external financing environment for emerging markets was singularly unsupportive. At the same time, investor apprehension over policy continuity in Brazil and other Latin American countries became accentuated with the approach of elections. Both mature and emerging markets experienced a sharp tiering by credit quality, with highly leveraged firms and countries with large borrowing requirements at the focal point of investor concern. Signs of broad-based contagion in emerging debt markets were limited, notwithstanding an increase in volatility. In the primary markets, unsecured access was effectively closed to non-investment grade issuers in Latin America, while Asian and Eastern European issuers experienced relatively open access. However, cumulative gross issuance of bonds, loans, and equities in the nine months through September has fallen well below previous years. So long as the external environment remains turbulent and uncertainty over policy continuity in key emerging markets persists, risks for emerging markets will remain elevated. Mitigating these risks are the limited leverage in emerging credit markets and the likely continuation of investor discrimination.