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Business and Economics > Banks and Banking

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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 Staff Country Reports
Spain: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Less Significant Institutions
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on regulation and supervision of less significant institutions (LSI) as part of Financial Sector Assessment Program in Spain. The Banco de España’s (BdE) extensive efforts to improve corporate governance of cooperative LSIs are commendable, and in this context, it is recommended that work continue with additional focus on onsite activities. The BdE should further increase its supervisory scrutiny of LSIs’ management of liquidity risk and interest rate risk in the banking book (IRRBB), building on its existing monitoring of LSIs’ capital and liquidity levels and exposures to IRRBB. The extensive regulatory requirements and supervisory activities of LSIs’ credit risk have been instrumental to cover this key priority, but reform is needed to enhance the related-parties framework and address gaps relative to international standards. The BdE’s joint work with Sepblac should be an opportunity to enhance the risk-based aspects of oversight of anti-money laundering and countering the financing of terrorism (AML/CFT).
Keywords:
Banco de España; Dirección general de Seguros y Fondos de Pensiones; executive Resolution authority; Instituto de Crédito Oficial; money laundering; autonomous communities; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit risk; Liquidity risk; Operational risk; Global
Cover IMF Staff Country Reports
Spain: Financial Sector Assessment Program-Technical Note on Financial Safety Net and Crisis Management
International Monetary Fund. Monetary and Capital Markets Department
This paper examines a technical note on financial safety net and crisis management as part of Financial Sector Assessment Program in Spain. Spanish authorities have made good progress in establishing an effective crisis management and resolution regime. The Spanish authorities should integrate bank resolution authority for planning and execution in one institution. Integration would ensure that the national resolution authority responsible for implementing orderly resolution actions has control over the primary levers necessary to achieve its objectives. The Spanish authorities need to establish a framework for addressing liquidity needs in resolution. Spanish authorities should continue to enhance cross-authority crisis coordination arrangements. This should include formalizing its existing crisis management practices and prioritizing by agreeing a cross-authority crisis simulation exercise strategy. Spain’s Executive Resolution Authority should also have the flexibility, where possible, under national procurement legislation to depart from procurement rules in a crisis scenario to appoint external advisory support including independent valuers at short notice.
Keywords:
bank Resolution planning; Banco de España; IMF STX staff; resolution execution; directorate General insurance; authority crisis coordination; Bank resolution; Crisis management; Bank resolution framework; Crisis resolution; Financial sector stability; Global
Cover IMF Staff Country Reports
Spain: Financial Sector Assessment Program-Technical Note on Cyber Risk and Financial Stability
International Monetary Fund. Monetary and Capital Markets Department
This paper explores a technical note on cyber risk and financial stability as part of Financial Sector Assessment Program (FSAP) in Spain. Technology risk and cyber resilience of the financial sector has become a focus area of the authorities, within the broader context of operational risk and resilience. This intensified focus by authorities is timely and important from the perspective of the continuity of financial service provision and the stability of the Spanish financial system. The FSAP found cyber risk supervisory practices of the authorities with regard to less significant institutions and financial market infrastructures in scope to be materially in line with applicable regulations and guidance and prevailing international good practice. Resource constraints are the most prominent challenge that the authorities are confronted with. A number of further weaknesses have a negative impact notwithstanding the overall strength of cyber risk supervision.
Keywords:
infrastructure regulation; banco de España; banking institution; Bolsas y Mercados Españoles; staff team of the International Monetary Fund; Cyber risk; PFM information systems; Payment systems; Financial Sector Assessment Program; External balance assessment (EBA); Global
Cover IMF Staff Country Reports
United Kingdom: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyses monetary policy issues in the UK. It examines key macro and financial indicators and assesses the effects of the tightening thus far. The paper finds that monetary transmission has largely mirrored previous episodes, with the most notable exception of the mortgage channel, which has been slower due to a higher share of fixed-rate mortgages. Additionally, it reveals an outsized impact of federal announcements on UK financial markets and argues that this will place a premium on Bank of England (BoE) communications in a context where the BoE may diverge. Monetary transmission in the UK during the current cycle has mostly worked as expected and has been similar to the experiences in other advanced economies. The paper identifies identify monetary policy surprises through changes in high-frequency market indicators within a narrow window around monetary policy announcement. The results indicate that Federal Open Market Committee spillovers do have a sizable effect on monetary transmission in the UK.
Keywords:
UK construction; UK workforce; spending scenario; Fed Policy spillover; MPC decision; visa regime; Housing; Education spending; Inflation; Global
Cover IMF Working Papers
Aging Gracefully: Steering the Banking Sector through Demographic Shifts
Patrick A. Imam
and
Christian Schmieder
We analyze how aging populations might affect the stability of banking systems through changes in the balance sheets and risk preferences of banks over the period 2000-2022. While the anticipated decline in maturity transformation due to aging hints at a possible reduction in risk exposure, an older population may propel banks towards yield-seeking behaviors, offsetting the diminishing prominence of conventional lending operations. Through a comprehensive examination of advanced economies over the past two decades, our findings reveal a general enhancement in bank stability correlating with the aging of populations. However, the adaptive responses of banks to these demographic changes are potentially introducing tail risks. Given the rapid global shift towards aging societies, our analysis highlights the critical need for policymakers to be proactive and vigilant. This is particularly pertinent considering historical precedents where periods of relative stability have often been harbingers of emerging risks.
Keywords:
Aging; Demographics; Bank risk-taking; Financial Stability; IMF working paper No. 24/118; tail risk; risk preference; stability risk; solvency profile; bank assets; Commercial banks; Bank soundness; Loans; Global
Cover IMF Staff Country Reports
Spain: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This paper presents report on Financial Sector Assessment Program (FSAP) in Spain. The bank-dominated Spanish financial system has shown resilience against shocks and household and nonfinancial corporate sectors have continued to de-lever their balance sheets. Nonbank financial intermediation comprises a smaller share of the financial system. Systemic risk analyses cover the banking, household, nonfinancial corporates, and real-estate sectors. The main risks to financial stability are of an abrupt, significant slowdown in growth alongside a material, further tightening in financial conditions, including higher interest rates and risk premia and downward pressure on real estate valuations. Banks’ ability to cope with asset quality pressures without resorting to deleveraging is inhibited by incumbent solvency buffers that are lower than European peers on a risk-weighted basis. In the near term, deploying policies that ensure that significant banks retain a greater share of profits to further raise capital buffers and be better positioned against downside risks is desirable. Macroprudential and supervisory authorities need to be well resourced to address emerging risks and challenges and close previously identified gaps in the policy framework.
Keywords:
cash flow; coverage ratio; financial system; core inflation; Tier 1; research support; Financial sector stability; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial Sector Assessment Program; Credit; Commercial banks; Global
Cover Handbook on Measuring Digital Trade
Handbook on Measuring Digital Trade
Second edition
World Trade Organization
,
Organization for Economic Co-operation and Development
,
International Monetary Fund
, and
United Nations

Abstract

Digital technologies have made it increasingly feasible for buyers and sellers to place and receive orders on a global scale. They also enable the instantaneous remote delivery of services directly into businesses and homes, including internationally. The Handbook on Measuring Digital Trade sets out a conceptual and measurement framework for digital trade that aligns with the broader standards for macroeconomic statistics. It aims to help statistical compilers to address policymakers’ needs for statistical evidence on digital trade. It includes extensive compilation guidance, drawing upon substantive inputs and case studies from both developed and developing economies and covering a variety of survey and non-survey sources. This second edition of the Handbook builds upon the concepts set out in the first edition, published in 2019. Focusing on cross-border digitally ordered goods and services, on digitally delivered services, and on the role played by digital intermediation platforms the Handbook provides a framework and template for the compilation of internationally comparable statistics on digital trade.

Keywords:
Digital trade; digitalization; international trade; digital intermediation platforms; statistics; measurement; trade transaction; delivered trade; trade statistics; ICT-enabled trade; ordered trade; Trade in services; Imports; Exports; Trade in goods; Service exports; Global; Asia and Pacific
Cover IMF Staff Country Reports
Euro Area Policies: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper highlights quantitative tightening (QT) by the European Central Bank (ECB). It uses evidence from the literature on the impact of central bank bond purchases and sales on bond yields, and the monetary policy stance, to outline a roadmap for reducing the Euro system’s bond holdings. The current tightening cycle provides an opportunity to revisit the ECB’s balance sheet policy. With inflation running above target, the monetary accommodation provided by the ECB’s bond holding is no longer necessary. The current tightening cycle provides an opportunity to revisit the ECB’s balance sheet policy. With inflation running above target, the monetary accommodation provided by the ECB’s bond holding is no longer necessary. The paper concludes that the ECB’s short term policy rates should be the main choice for adapting the monetary policy stance to changing circumstances and QT should proceed in a gradual, predictable manner as outlined by the ECB.
Keywords:
ECB Policy rate; ECB balance sheet; app portfolio; C. Policy consideration; bond supply net of ECB; Financial statements; Unconventional monetary policies; Central bank policy rate; Monetary stance; Securities
Cover IMF Working Papers
Raising Rates with a Large Balance Sheet: The Eurosystem’s Net Income and its Fiscal Implications
Nazim Belhocine
,
Mr. Ashok Vir Bhatia
, and
Jan Frie
The Eurosystem, having purposefully expanded its footprint in recent years, confronts a period of loss-making as rising policy rates lift the remuneration of bank reserves while assets churn more slowly. This paper projects the net income of the Eurosystem and its “top-five” national central banks over a ten-year horizon, finding that losses, while large, will be temporary and recoupable. The policy conclusions are fourfold. First, the temporary and recoupable nature of the loss-making obviates any need for capital contributions or indemnities from the state, instead allowing losses to be offset against future net income. Second, it must nonetheless be communicated that fiscal impacts will be material, with annual taxes and transfers of 0.1−0.2 percent of GDP giving way to potentially long interruptions in some cases. Third, more-conservative profit distribution policies in the future steady state could help mitigate the on-off pattern of dividends. Finally and most vitally, loss-making must remain orthogonal to monetary policy decision-making, as indeed it is at the ECB. Ultimately, credibility will rest on performance in delivering on the price stability mandate.
Keywords:
Eurosystem; balance sheet; monetary policy; profit distribution; seigniorage; central bank independence; ECB Policy; net purchase; QE portfolio; selected NCBs; Eurosystem's net income; rate path; pooling reference rate; distribution policy; Income; Financial statements; Unconventional monetary policies; Central bank policy rate; Global; Europe