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Business and Economics > Banks and Banking

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Cover IMF Staff Country Reports
Republic of San Marino: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper compares Sammarinese banks with nearby Italian banks with similar business models, highlighting gaps in asset quality, capital adequacy, and cost efficiency. Individual banks can boost profits by reducing the high operating costs and increasing the share of income-generating assets. If within bank consolidation is insufficient to restore competitiveness, system-wide consolidation can be considered to achieve economies of scale. It is key to improve the competitiveness of the banking sector well-ahead of the 15-year time frame granted by the EU association agreement. The analysis shows most San Marino banks need to catch up in terms of asset quality, capital adequacy and cost efficiency. A system-level consolidation can be considered. The banking sector remains oversized. The number of bank branches needs to be reduced by more than two thirds to reach the EU level. The share of income-generating assets should also be increased.
Keywords:
Nowcasting GDP; NOWCASTING tool; businesses' expectation; association agreement; DFM approach to Nowcasting; A. comparing San Marino bank; San Marino bank; Small and medium enterprises; Income; Manufacturing; Commercial banks; Global
Cover Technical Assistance Reports
Vietnam: Technical Assistance Report-Financial Soundness Indicators Mission (April 3–7, 2023)
International Monetary Fund. Statistics Dept.
The mission worked with officials of the Macroprudential Supervision Department (MSD) of the State Bank of Vietnam (CBS) to enhance the compilation and reporting of financial soundness indicators (FSIs) for deposit takers (DTs). The mission reviewed source data, prepared new spreadsheets, and implemented updated FSIs report forms in line with the 2019 FSIs Compilation Guide. The mission also discussed the potential for compiling FSIs for the rapidly growing insurance sector in Vietnam. Alongside these improvements, the SBV will be able to produce updated and improved FSIs for financial sector surveillance.
Keywords:
Vietnam; Financial Soundness Indicators; 2019 FSIs Compilation Guide; deposit takers; insurance corporations.; bank Supervisory Agency; FSIs Guide; IMF's Statistics Department; G. FSIs data; Vietnam development bank; E. FSIs compilation framework; Financial statements; Commercial banks; Insurance companies; Income
Cover Policy Papers
Review Of Charges And The Surcharge Policy—Reform Proposals
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Strategy, Policy, & Review Department
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.



Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.



Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.



The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
Keywords:
General Resources Account; Charges; Margin for the basic rate of charge; Surcharges; Commitment Fees; Precautionary Balances; Income; transparency Policy; IMF's lending policy; surcharge structure; surcharge payment; surcharge rate; surcharge payer; SDR interest rate; Credit; Income distribution; Financial statements; Global
Cover Policy Papers
Initial Considerations For The Review Of Charges And The Surcharge Policy
International Monetary Fund. Policy Development and Review Dept.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.



Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.



Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.



The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
Keywords:
General Resources Account; Charges; Margin for the basic rate of charge; Surcharges; Commitment Fees; Precautionary Balances; Income; multilayered framework; fund arrangement; surcharge rate; intermediation cost; fund's liquidity; borrowing cost; Credit; SDR interest rate; Balance of payments need; Credit risk; Global
Cover Policy Papers
Review Of Charges And The Surcharge Policy— A Possible Reform Package
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Policy Development and Review Dept.
On October 11, 2024, the IMF’s Executive Board concluded the Review of Charges and the Surcharge Policy. The review is part of a broader ongoing effort to ensure that the IMF’s lending policies remain fit for purpose to meet the evolving needs of the membership. Charges and surcharges are important elements of the IMF’s cooperative lending and risk-management framework, where all members contribute and all can benefit from support when needed. Together, they cover lending intermediation expenses, help accumulate reserves to protect against financial risks, and provide incentives for prudent and temporary borrowing. This provides a strong financial foundation that allows the IMF to extend vital balance of payments support on affordable terms to member countries when they need it most.



Against the backdrop of a challenging economic environment and high global interest rates, the Executive Board reached consensus on a comprehensive package of reforms that substantially reduces the cost of borrowing for members while safeguarding the IMF's financial capacity to support countries in need. The approved measures will lower IMF borrowing costs by about US$1.2 billion annually or reduce payments on the margin of the rate of charge as well as surcharges on average by 36 percent. The number of countries subject to surcharges in fiscal year 2026 is expected to fall from 20 to 13.



Key reforms include a reduction in the margin for the rate of charge, an increase in the threshold for level-based surcharges, a reduction in rate for time-based surcharges, an alignment of thresholds for commitment fees with annual and cumulative access limits for GRA lending facilities, and institution of regular reviews of surcharges.



The series of three papers informed the Executive Board’s first and second informal engagements (July and September 2024) and the formal meeting (October 2024) on this review.
Keywords:
General Resources Account; Charges; Margin for the basic rate of charge; Surcharges; Commitment Fees; Precautionary Balances; Income; reform package; transparency policy; EMBIG market spread; IMF's transparency policy; Fund credit; desk survey; Credit; SDR interest rate; Credit risk; Return on investment; Global
Cover International Monetary Fund Annual Report 2024 Financial Statements
International Monetary Fund Annual Report 2024 Financial Statements
International Monetary Fund. Secretary's Department

Abstract

The audited financial statements that follow form Appendix VI of the International Monetary Fund’s Annual Report 2024 and can be found, together with Appendixes I through V and other materials, on the Annual Report 2024 web page (www.imf.org/AR2024). They have been reproduced separately here as a convenience for readers. Quarterly updates of the IMF’s Finances are available at www.imf.org/external/pubs/ft/quart/index.htm.

Keywords:
inflation; resilience; debt vulnerabilities; inequality food insecurity; quota; PRGT; geopolitical fragmentation; conflict; climate change; digitalization; cyber risks; artificial intelligence; capacity development; lending; economic surveillance; Deputy managing director; IMF organization chart; boards of governors of the bank; Joint Ministerial Committee of the boards of governors; and international cooperation; fair value; valuation basket; IMF activity; IMF's General Resources Account; basket currency; reserve account; unit of account; Financial statements; Credit risk; Loans; Income; Currencies; Global; Middle East and Central Asia; Europe; Asia and Pacific; Western Hemisphere
Cover IMF Staff Country Reports
Botswana: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper discusses the rationale for and design of a new Sovereign Wealth Fund (SWF) in Botswana. It reviews the causes of declining financial reserves and calculates fiscal targets that would be needed to achieve insurance and intergenerational equity objectives. While debt ratios have been steady, the government has financed these deficits by drawing down its assets. Intergenerational equity may be better served by creating financial assets, rather than through investment spending, although the two are not mutually exclusive. Botswana has tended to allocate resource revenues primarily to physical and human investment. Before discussing SWF design, it is important to consider the level of savings that the government requires to achieve its policy objectives. There are many reasons why a government may want to generate savings and manage them in a SWF. IMF concludes that a SWF could provide a useful institutional framework to support rebuilding buffers, but achieving significant savings to meaningfully fund an SWF would require much tighter fiscal policy than has been observed in recent years.
Keywords:
protection system; pula fund; research support; government investment account; C. financing social protection; Income inequality; Social protection spending; Fiscal rules; Budget planning and preparation; Global; Africa; Sub-Saharan Africa
Cover IMF Staff Country Reports
Spain: Financial Sector Assessment Program-Technical Note on Systemic Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on a technical note on systemic risk analysis as part of Financial Sector Assessment Program (FSAP) in Spain. Spain’s economy and its well-developed, bank-dominated financial system have shown resilience through the pandemic, rising global geo-political tensions and tighter financial conditions. The Spanish banking sector has a global imprint, operates a traditional business model, and is strongly profitable. Downside risks are prominent and existing vulnerabilities could amplify the impact of exogenous shocks on financial stability. The Spanish banking and real sectors’ resilience was assessed against a severe but plausible adverse scenario that reflects these risks. The FSAP analysis suggests a moderate rise in the debt-at-risk of the nonfinancial corporates sector in the adverse scenario. Liquidity stress tests show that Significant banking institutions can cope comfortably with market valuation shocks and would face cash flow challenges under large withdrawals of retail deposits. Interconnectedness analysis does not reveal significant vulnerabilities of Spanish banks to of cross-border contagion of foreign banking distress.
Keywords:
solvency stress test result; NFC liquidity; D. liquidity-solvency interaction; banking sector asset quality; banking sector asset composition; IMF approach; Stress testing; Loans; Credit; Liquidity requirements; Income; Global; Caribbean
Cover IMF Working Papers
Bank Profitability in Europe: Not Here to Stay
Ruo Chen
,
Vincenzo Guzzo
,
Fazurin Jamaludin
,
Adil Mohommad
,
Ritong Qu
, and
Yueshu Zhao
Slower passthrough of policy interest rate hikes to deposit rates relative to their loan rates has led to sharply wider bank net interest margins. Combined with resilient asset quality, wider net interest margins supported record profits for European banks in 2023. Drawing on historical data from the balance sheets and income statements of over 2,500 European banks, this paper shows that abnormally high profits are expected to fade soon as interest income will decline, once policy rates start being lowered, while higher impairment costs historically have weighed on profits with a lag. Moreover, a number of structural factors that have eroded the performance of European banks in the past two decades have largely remained unaddressed and will continue being a drag on profits and capital. Therefore, policymakers should encourage banks to preserve capital buffers and build resilience to future shocks, while exercising caution when considering taxes on profits or other measures that could divert potential sources of capital from banks.
Keywords:
European banks; bank profits; interest rate margins; asset quality; bank capital; bank taxation.; bank profit; interest rate margin; bank taxation; impairment cost; Bank soundness; Financial statements; Income; Yield curve; Central bank policy rate; Europe; Global
Cover IMF Staff Country Reports
Luxembourg: 2024 Article IV Consultation-Press Release; and Staff Report; and Statement by the Executive Director for Luxembourg
International Monetary Fund. European Dept.
The 2024 Article IV Consultation discusses that Luxembourg’ economy contracted in 2023 despite buoyant consumption, mainly due to weak external demand and residential investment. Inflation is subsiding but underlying measures remain high. Credit growth turned negative as demand dropped and real estate prices declined. The newly elected government has approved a mix of temporary and permanent measures to support purchasing power and housing demand. Gradually easing financial conditions, continuing disinflation and expansionary fiscal policy is expected to help the economy rebound and the financial cycle bottom out. Inflation should decline in 2024, before temporarily increasing in 2025 once administrative price measures expire. The recovery is fragile amid heightened geopolitical tensions. Risks are tilted to the downside, stemming mainly from external demand/supply shocks and a disorderly correction of asset prices, including domestic real estate valuations. Sustained economic growth hinges on raising productivity, which has been stagnant since the Global Financial Crisis. Increasing investment in intangible assets, aligning workers’ skills with the current demands of the economy, reducing administrative burden, and making the wage indexation system more flexible will be key to harnessing productivity gains and bolstering competitiveness.
Keywords:
FATF report; Luxembourg economy; executive board assessment; headline inflation; labor productivity growth; Macroprudential policy; Productivity; Income; Financial Sector Assessment Program; Global