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Business and Economics > Banks and Banking

You are looking at 1 - 10 of 8,235 items for :

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Cover FinTech Notes
Private Law Aspects of Token-Based Central Bank Digital Currencies
Marianne Bechara
,
Wouter Bossu
,
Amira Rasekh
,
Chia Yi Tan
, and
Akihiro Yoshinaga
In designing central bank digital currencies (CBDCs), it is imperative that central banks carefully consider its legal foundations. As with any form of money, CBDCs require a solid basis under public and private law to provide it with the necessary legal certainty and political support that will underpin its wide circulation. This Fintech Note examines the private law aspects of token-based CBDC primarily intended for retail use. It follows a previous IMF working paper that examines the legal foundations of CBDC under central bank law and its treatment under monetary law—the main public law aspects of CBDC.
Keywords:
Token-Based CBDC; Private Law; Central Bank Digital Currencies; Legal Framework; Ownership Rights; Transfer Mechanisms; Financial Intermediaries; private law aspect; TokenBased central bank digital currencies; CBDC holder; IMF Library; IMF Fintech Note 2025/003; Currencies; Securities; Commercial banks; Global
Cover IMF Working Papers
Evaluating Historical Episodes using Shock Decompositions in the DSGE Model
Zamid Aligishiev
,
Michael Ben-Gad
, and
Joseph Pearlman
We present alternative methods for calculating and interpreting the influence of exogenous shocks on historical episodes within the context of DSGE models. We show analytically why different methods for calculating shock decompositions can generate conflicting interpretations of the same historical episodes. We illustrate this point using an extended version of Drautzburg and Uhlig’s (2015) model of the U.S. economy, focusing on the periods 1964–1966, 1979–1987, 2006–2009, 2016–2020 and 2020–2023. We argue that the best method for analyzing particular episodes is one which isolates the influence of the shocks during the period under consideration and where the initial conditions represent the system’s distance from balanced growth path at the beginning of the episode.
Keywords:
DSGE model; Shock Decomposition; Financial Frictions; Fiscal Policy; copyright page; influence of the shock; monetary policy shock; differencing method; decomposition method; Sovereign bonds; Central bank policy rate; Private investment; Public investment spending; Global
Cover Global Financial Stability Notes
Pension Funds and Financial Stability
This Global Financial Stability Note examines the growth of the pension fund sector and the potential financial stability implications. Historically, pension funds have been seen as a contributor to financial stability because of their long-term and well-diversified liabilities. However, the sector has undergone significant structural shifts accelerated by a prolonged period of low interest rates, increasing its exposure to traditional risks while introducing emerging risks; this is reflected in growing intra-financial sector interconnectedness and exposure to long-term sovereign bonds. The recent transition to higher interest rates should be positive for the pension sector, albeit its pace and abruptness has been associated with liquidity stress and contagion risks in some countries.
Keywords:
Pension Funds; Financial Stability; Assets; Risks; Pension Plans; major pension fund sector; IMF Library; major pension savings market; structural liquidity; asset-liability duration mismatch; risk analysis; Pension spending; Pensions; Financial sector stability; Liquidity risk; Global
Cover High-Level Summary Technical Assistance Reports
Bhutan: Development of an Interest Rate Corridor Framework
Oleg Churiy
and
Bernard J Laurens
At the request of the Royal Monetary Authority of Bhutan (RMA), an IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) visited Thimphu during August 20-29, 2024. The mission’s objectives were to assist the authorities in setting up interest rate corridor (IRC) and operationalizing the related instruments, operations, liquidity forecasting, and collateral frameworks.
Keywords:
Monetary policy; International organization; IMF South Asia Regional Training and Technical Assistance Center; capacity development recipient; staff capacity; high-level summary; money market development; Interest rate corridor; Open market operations; Liquidity forecasting; Liquidity management
Cover Technical Assistance Reports
Bhutan: Technical Assistance Report-Development of an Interest Rate Corridor Framework
International Monetary Fund. Asia and Pacific Dept
and
International Monetary Fund. Monetary and Capital Markets Department
In August 2024, at the request of the Royal Monetary Authority of Bhutan (RMA), the IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) conducted a Technical Assistance (TA) mission in Thimphu. The mission aimed to assist the RMA in establishing an interest rate corridor (IRC) and operationalizing related instruments, liquidity forecasting, and collateral frameworks. The mission identified that the RMA lacks necessary monetary policy instruments to effectively address changing systemic liquidity conditions and financial stability challenges. It emphasized the need to move away from reliance on administrative controls, as the absence of appropriate price incentives reinforces the preference for foreign exchange among Bhutanese residents, increasing pressures on the peg. To tackle these issues, the mission proposed a phased approach to introduce the IRC. Initially, relevant external and internal documents should be finalized, followed by mock operations. The first phase involves introducing a one-week main Open Market Operation (OMO), conducted weekly at the policy rate with full allotment. Automatic access to the IRC's standing facilities should be ensured. Later, fixed-quantity, variable-rate OMOs should be utilized, relying on liquidity forecasting to calibrate operations. Additionally, the mission recommended reinstating sweeping arrangements for government accounts and enhancing coordination with the Treasury to improve liquidity forecasting. These measures aim to strengthen the RMA's operational framework and enhance the effectiveness of monetary policy.
Keywords:
Monetary policy; International organization; Bhutan.; RMA money market contact group; IMF South Asia Regional Training and Technical Assistance Center; IMF's Monetary; expert of the IMF Monetary; interest rate corridor framework; Liquidity management; Interest rate corridor; Liquidity; Commercial banks; Central bank policy rate
Cover IMF Staff Country Reports
Indonesia: Financial Sector Assessment Program-Technical Note on Stress Testing and Systemic Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
The FSAP team undertook a thorough top-down corporate and bank solvency, bank liquidity stress tests as well as analysis of interconnectedness using mid-2023 data. This note covers the methodology and results of the scenario-based solvency test, the single factor sensitivity analysis, the liquidity test, and interconnectedness analysis. The stress test exercise was carried out on a sample of 105 commercial banks. The analysis is heavily dependent on supervisory data on individual banks’ positions shared by the OJK and BI as well as publicly available information on corporate sector. While FSAP results are not directly comparable to the authorities’ own stress testing results due to differences in scenarios, methodologies, and objectives, they provide an assessment of the system-wide resilience of the Indonesian banking sector at the current juncture.
Keywords:
banking sector characteristic; coverage ratio; interconnectedness ANALYSIS; capital markets department; bank credit risk; liquidity sensitivity analysis; FX LIQUIDITY ANALYSIS; Stress testing; Commercial banks; Liquidity; Loans; Securities; Global
Cover IMF Staff Country Reports
Indonesia: Financial Sector Assessment Program-Technical Note on Macroprudential Policy
International Monetary Fund. Monetary and Capital Markets Department
The 2017 FSAP focused its recommendations around strengthening and clarifying the mandates of the authorities. The FSAP noted that the multiple objectives of the organizations, together with the fact that there was no defined framework for cooperation and the separate control over prudential tools, created the risk that policies implemented by both agencies might come into conflict or have undesirable consequences and blur accountability lines.
Keywords:
IMF-World Bank Financial Sector Assessment Program; Macroprudential liquidity incentive; Indonesia FSAP; Macroprudential intermediation ratio; financing ratio; Financial sector stability; Macroprudential policy; Systemic risk; Stress testing; Global
Cover Selected Issues Papers
Real Estate Sector and Financial Stability Risks in Chile: Chile
Tatsushi Okuda
The Chilean real estate sector has recently undergone adjustments which have increased the risks for the financial sector, but the system remains overall resilient. In the baseline, the real estate market is expected to modestly recover, and several factors mitigate credit risk. The buffers in the financial sector currently appear broadly adequate to absorb stresses from high long-term interest rates and the tail risk of a real estate crisis. Nevertheless, supervisors should monitor these risks closely, keep advancing in closing data gaps, and continue to extend stress test models to comprehensively capture real estate-specific risk factors.
Keywords:
Financial sector stability; Real estate sector; Stress testing; I. housing wealth effect; risk factors; real estate crisis; real estate; Mortgages; Loans; Long term interest rates; Global
Cover IMF Working Papers
Sandcastles and Financial Systems: A Sandpile Metaphor
Francesco Luna
and
Luisa Zanforlin
Social welfare costs from bank resolution, including contagion and moral hazard, are often thought to be minimized when supervisors can direct the merger of a failing bank with a sound, healthy one. However, social losses may become even larger if the absorbing institutions fail themselves. We ask whether social welfare losses are indeed lower when supervisors intervene rather than not. We use the sand pile/Abelian model as a metaphor to model financial losses which, as sand grains that fall onto a pile, eventually lead to a slide/failure. When capital in the system is insufficient to absorb the failing institution there will be welfare losses. Results suggest that, over the longer-term, social costs are lower when supervisors manage mergers. Additionally, financial networks that have a structure that minimizes social losses also minimize crises frequency. However, the bank employed resolution strategy will determine which financial network structures are associated with the minimum average loss per bankruptcy event.
Keywords:
Applied Abelian model; Banking; Financial Networks; Financial Economics; Banking Crisis; Bankrupcy; Bank Resolution; Selforganized Criticality; Bank Regulation and Supervision; welfare loss; resolution strategy; loss distribution; bank resolution regime supervisor; banks fail; shareholder bank; Distressed institutions; Commercial banks; Crisis resolution; Global
Cover Technical Assistance Reports
Republic of Azerbaijan: Technical Assistance Report-Modernizing Central Bank Communication
International Monetary Fund. Monetary and Capital Markets Department
This report presents an analysis of the Central Bank of the Republic of Azerbaijan's (CBA) communication framework and offers recommendations for enhancement. The technical assistance mission, led by the IMF Monetary and Capital Markets Department, aimed to modernize the CBA's communication strategies to align with international best practices. The findings indicate that while the CBA has made significant progress in external communications, there are areas for improvement, particularly in formalizing communication processes and enhancing message clarity. Recommendations include strengthening the role of the Communications Division, adopting a proactive communication policy, and improving the monetary policy communication cycle. These changes are expected to elevate the CBA's communication to a policy tool that supports its objectives of price and financial stability.
Keywords:
Central Bank; Communication; Monetary Policy; Transparency; Inflation Targeting; Stakeholders; Capacity Building; Policy Framework; Institutional Strategy; Communication Division; Azerbaijan.; CBA monetary policy press release; C. communications management; monetary policy department; B. Communication cycle; communication framework; CBA flagship policy publication; Monetary policy communication; Social networks; Financial sector stability; Central bank policy rate; Monetary policy frameworks; Global