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Business and Economics > Finance: General

You are looking at 1 - 10 of 873 items for :

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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
Cover Selected Issues Papers
ECB Monetary Policy Passthrough to Bank Interest Rates During Tightening: Republic of Kosovo
Ezgi O. Ozturk
This paper analyzes the transmission of ECB policy rate changes to bank interest rates in Kosovo during the 2022-23 tightening cycle. While both lending and deposit rates increased, the passthrough was more limited compared to the euro area and regional peers. Three key factors explain this limited transmission: Kosovo's stage of financial development, high banking sector liquidity, and significant bank concentration.
Keywords:
Monetary policy transmission; interest rates; banking sector; euroization; financial development; Kosovo; ECB monetary policy Passthrough; ECB policy rate change; ECB policy rate Passthrough; ECB Policy rate pass-through; Central bank policy rate; Deposit rates; Financial sector development; Inflation; Financial inclusion; Europe
Cover Departmental Papers
Corporate Sector Vulnerabilities and High Levels of Interest Rates
Bruno Albuquerque
,
Nassira Abbas
,
José M. Garrido
,
Deepali Gautam
,
Benjamin Mosk
,
Thomas Piontek
,
Anjum Rosha
,
Thierry Tressel
, and
Aki Yokoyama
This paper provides a comprehensive overview of corporate sector vulnerabilities that have emerged post-pandemic. The main focus in on the financial stability implications from corporate sector vulnerabilities in a new environment of high interest rates. Although several central banks have recently started cutting interest rates, the expectation is that high interest rates, above pre-pandemic levels, are here to stay. It is then especially important to design and deploy appropriate policies that may prevent and mitigate risks from the corporate sector. The main findings of the paper are as follows. First, the paper finds that interest rate increases may transmit more strongly to the real economy in the current environment since the global share of financially distressed firms has been trending upwards, especially in emerging markets (EMs). Moreover, the lagged effects of past monetary policy tightening may have adverse effects on firms’ capacity to invest. Second, an adverse macroeconomic scenario of negative demand shocks coupled with higher interest rates would lead to a fast and large increase in corporate defaults. Financial stability risks would increase materially, especially for EMs and less-developed banking systems, as bank capital buffers would fall considerably in this scenario. Third, the increasing role of nonbanks in corporate credit intermediation in advanced economies may amplify overall financial stability risks. This paper closes some of the data gaps and shows that since the GFC, nonbanks have been increasing their exposure to riskier firms and to the less productive segment of the economy, including zombie firms and nontradable firms. The migration of credit to the unregulated sector raises concerns about the propagation of risks to the rest of the financial system from a potential corporate default cycle. It is paramount to continue closing data gaps in this sector, while extending the regulatory perimeter to nonbanks to improve the overall resilience of the financial sector. Finally, the paper documents some progress on insolvency and restructuring regimes to deal with corporate distress since the pandemic. Nevertheless, several shortcomings persist that prevent countries from resolving firms quickly in a potential scenario of an intensification of corporate distress.
Keywords:
corporate vulnerabilities; insolvency frameworks; financial stability; monetary policy; nonbanks; corporate stress tests; crisis preparedness indicator; monetary policy shock; IMF Library; nonbank financials; differential effect; nonfinancial corporates default probability; Corporate sector; Solvency; Credit; Business enterprises; COVID-19; Global
Cover IMF Working Papers
A Confidence-Financial Inclusion Nexus in the Caucasus and Central Asia?
Kalin I Tintchev
and
Kady Keita
We document novel evidence that confidence in macrofinancial stability has a positive impact on financial inclusion in CCA countries and more broadly. This channel is particularly important for CCA countries, with confidence gains of 1 unit leading to 0.7 unit improvement in financial inclusion. Institutional factors such as level of governance and reliance on transparent policy rules and robust financial safety nets explain a large fraction of the variability in confidence in the region. We find that governance reforms are critical for deepening financial inclusion while the impact of inflation targeting, fiscal rules and deposit insurance schemes is positive and material only when governance levels exceed certain thresholds.
Keywords:
Financial inclusion; confidence; governance; inflation targeting; fiscal rules; deposit insurance; inclusion Nexus; governance reform; CCA country; governance level; governance gap; Fiscal rules; Financial sector development; Global; Central Asia and the Caucasus
Cover Annual Report on Exchange Arrangements and Exchange Restrictions 2023
Annual Report on Exchange Arrangements and Exchange Restrictions 2023
International Monetary Fund. Monetary and Capital Markets Department

Abstract

The AREAER provides a comprehensive description of restrictions on international trade and payments, capital controls, and measures implemented in the financial sector, including prudential measures that may affect capital flows for all IMF members. It also provides information on the classification of their exchange rate arrangements, operation of foreign exchange markets, restrictions on current international payments and transfers and multiple currency practices subject to the IMF’s jurisdiction in accordance with Article VIII. Descriptions of individual member countries are available at AREAER Online.

Keywords:
AREAER; exchange arrangements; monetary policy frameworks; Article VIII; Article XIV; exchange restrictions; multiple currency practices; import payments; export proceeds; current transfers; resident accounts; nonresident accounts; capital controls; prudential measures
Cover IMF Staff Country Reports
South Africa: Central Bank Transparency Code Review
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on South Africa’s Central Bank Transparency Code Review. The South African Reserve Bank (SARB’s) strategic commitment to open and transparent communications should be anchored in a more robust institutional communication framework. Communications about the SARB’s role in the reform of the Gold and Foreign Exchange Contingency Reserve Account settlement framework and the implications for its financial autonomy should be further clarified. The SARB’s monetary policy framework is comprehensive, transparent and understandable, but would benefit from greater transparency about setting the inflation target, policy deliberations, and alternative risk scenarios. The SARB has significantly increased the transparency and accountability of its monetary policy framework by adopting appropriate communications vehicles to reach different audiences and by publishing model-based forecasts. The SARB would also benefit from enhancing the transparency of well-established governance arrangements and policies in some areas. It is recommended to strengthen the transparency of certain aspects of the SARB’s legal structure and autonomy, by providing a general explanation of the SARB’s legal protections and its institutional and functional autonomy.
Keywords:
contingency reserve account; central bank Transparency Code; IMF mission; review mission; production assistance; Financial sector stability; Anti-money laundering and combating the financing of terrorism (AML/CFT); Monetary policy frameworks; International reserves; Inflation targeting; Africa; Global
Cover IMF Staff Country Reports
Liberia: Request for a 40-Month Arrangement Under the Extended Credit Facility-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Liberia
International Monetary Fund. African Dept.
This paper presents Liberia’s Request for a 40-Year Arrangement under the Extended Credit Facility (ECF). The 40-month financing package will support the authorities’ Economic Reform Agenda to address macroeconomic imbalances, strengthen debt sustainability, and lay the foundations for higher, more inclusive, and private sector-led growth, beyond the enclave sector. The ECF arrangement is expected to catalyze additional external financing from international financial institutions and development partners. Liberia’s economic vulnerability has worsened in recent years. Fiscal slippages have compromised public debt sustainability, contributing to a sharp decline in international reserves. Governance weaknesses have also persisted. The authorities are firmly committed to revitalizing the reform agenda to support macroeconomic stability, promote broad-based economic development, and reduce widespread poverty. Comprehensive structural reforms, including improvements in governance and transparency, are critical for achieving these objectives. Maintaining strong program ownership, supported by capacity development, will be crucial to ensure program success and continued donor support.
Keywords:
central bank bank transaction; increase in capital expenditure; budget projection; approved budget; budget proposal; Debt sustainability analysis; Debt sustainability; Budget planning and preparation; Global; West Africa; Sub-Saharan Africa
Cover IMF Working Papers
A New Dataset of High-Frequency Monetary Policy Shocks
Marijn A. Bolhuis
,
Sonali Das
, and
Bella Yao
This paper presents a new dataset of monetary policy shocks for 21 advanced economies and 8 emerging markets from 2000-2022. We use daily changes in interest rate swap rates around central bank announcements to identify unexpected shocks to the path of monetary policy. The resulting series can be used to examine cross-country heterogeneity in the impact of monetary policy shocks. We establish a new empirical fact on monetary policy spillovers across countries: the monetary policy decisions of small open economy central banks, and not just major central banks, have substantial spillover effects on swap rates and bond yields in other countries.
Keywords:
monetary policy surprises; monetary policy shocks; central banks; central bank information effect; emerging markets; high-frequency method; spillovers; monetary policy spillovers; monetary policy spillover; monetary policy shock; information effect; monetary policy decision; monetary policy surprise; Yield curve; Sovereign bonds; Central bank policy rate; Emerging and frontier financial markets; Nominal effective exchange rate; Global
Cover IMF Staff Country Reports
Vietnam: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Vietnam
International Monetary Fund. Asia and Pacific Dept
The 2024 Article IV Consultation discusses that in the challenging year of 2023, the Vietnamese economy grew by 5 percent thanks to determined actions by the government. The economy was hit by turbulence in the real estate sector, financial distress, and a significant drop in exports. Economic growth is projected to recover to 6.1 percent in 2024, supported by continued strong external demand, resilient foreign direct investment, and accommodative policies. Domestic demand growth is expected to recover gradually as corporates navigate through high debt levels while the real estate sector will only fully recover over the medium term. Inflation is expected to hover around the State Bank of Vietnam’s target of 4–4.5 percent in the year of 2024. The fiscal stimulus is helping sustain domestic demand, including investment, which facilitates private sector deleveraging. However, fiscal support may need to be scaled down if there was a large inflation surprise. An upgraded fiscal framework would help improve public policies and manage challenges ahead. Sustaining high medium-term economic growth, amidst demographic and climate headwinds, requires broader structural reforms to boost productivity, address climate challenges, and strengthen governance.
Keywords:
USD trading band; IMF-World Bank Financial Sector Assessment Program; authorities of Viet Nam; SBV management; IMF's Institute for Capacity Development; Anti-money laundering and combating the financing of terrorism (AML/CFT); Credit; Inflation; Financial sector stability; Global
Cover Technical Assistance Reports
Sri Lanka: Technical Assistance Report-Liquidity Monitoring and Monetary Operations
International Monetary Fund. Asia and Pacific Dept
The IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) provided technical assistance (TA) to the Central Bank of Sri Lanka (CBSL) focusing on modernizing monetary operations framework and improving liquidity monitoring. Macroeconomic crisis, compounded by the pandemic, has created significant challenges for conducting monetary policy in Sri Lanka. Considering this, the mission proposed a phased approach for modernizing monetary policy instruments and operations, contingent on progress in ongoing debt restructuring, reducing financial stability risks, achieving macroeconomic stabilization, and improving CBSL’s balance sheet. A transitory model for monetary operations was recommended, centered on one week liquidity operations, while still envisaging a certain level of market segmentation. Key recommendations included introducing a single policy rate to strengthen monetary policy signaling, modifying Statutory Reserve Ratio, and operationalizing Standing Facilities to form an Interest Rate Corridor (IRC). In the later stages, when the CBSL can target aggregate liquidity, liquidity management should return to a mid-corridor system with Open Market Operations (OMO)s calibrated based on liquidity forecasts. These recommendations are designed to enhance monetary policy transmission, support the achievement of CBSL’s primary mandate of price stability, a prerequisite for macroeconomic stability and sustainable economic growth.
Keywords:
Sri Lanka; Monetary policy; international organization.; IMF South Asia Regional Training and Technical Assistance Center; liquidity monitoring; IMF's Monetary; liquidity Assistance facility; weakening monetary policy transmission; Liquidity; Special resolution regime; Open market operations; Liquidity forecasting; Central bank policy rate; Global