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Business and Economics > Finance: General

You are looking at 1 - 10 of 463 items for :

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  • International Investment; Long-term Capital Movements x
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Cover IMF Working Papers
Following the Money: Who is Keeping Coal Alive?
Gregor Schwerhoff
and
Mouhamadou Sy
The 2023 United Nations Climate Change Conference reinforced already existing pressure to transition away from fossil fuels, in particular for the most polluting source, coal. We use a comprehensive dataset on bank loans for coal projects to shed light on which type of banks continue to finance coal and how coal phase-out commitments affect coal financing. We find that coal financing is becoming increasingly concentrated, partly in banks with a very high coal exposure. We also find that many coal loans have maturities much shorter than the remaining lifetime of coal assets, thus exposing equity holders of coal assets to the risk of a more difficult loan rollover. An econometric analysis shows that countries with a strong commitment to coal phase-out, fixed in national law for example, receive less coal financing. Using an instrumental variable, we identify this effect as causal.
Keywords:
Coal; climate change; stranded assets; coal; divestment; United Nations climate change conference; Coal financing; phase-out commitment; coal financing; financing to the coal sector; Non-renewable resources; Financial sector development; Climate policy; Foreign direct investment; Asia and Pacific; Global; Europe; Middle East; Sub-Saharan Africa
Cover Regional Economic Outlook: Asia and Pacific, November 2024
Regional Economic Outlook: Asia and Pacific, November 2024
Asia and Pacific: Resilient Growth but Higher Risks
International Monetary Fund. Asia and Pacific Dept

Abstract

Short-term prospects for Asia and the Pacific have improved slightly compared to the IMF’s April forecasts, even though growth is still expected to moderate in 2024 and 2025. The regional growth projection for 2024 has been marked up to 4.6 percent from 4.5 percent in April, largely reflecting the over-performance in the first half of the year, and the region is forecast to contribute roughly 60 percent to global growth in 2024. In 2025, more accommodative monetary conditions are expected to support activity, resulting in a slight upward growth revision to 4.4 percent from 4.3 percent in April. Inflation has retreated in much of the region. At the same time, risks have increased, reflecting rising geopolitical tensions, uncertainty about the strength of global demand, and potential for financial volatility. Demographic change will act increasingly as a brake on activity, though structural shifts into high-productivity sectors such as tradable services hold promise to sustain robust growth.

Keywords:
Asia and the Pacific; growth; inflation; monetary policy; fiscal policy; China; AE Asia; emerging economy; headline inflation; foreign direct investment; monetary management; Asia EMDEs; EM Asia; Pacific island economy; ASEAN region; export opportunity; exports to the world; monetary policy response; Exports; Emerging and frontier financial markets; Central bank policy rate; Foreign direct investment; Asia and Pacific; Global; Pacific Islands; Central Asia
Cover IMF Working Papers
Europe’s Shift to EVs Amid Intensifying Global Competition
Philippe Wingender
,
Jiaxiong Yao
,
Robert Zymek
,
Benjamin Carton
,
Diego A. Cerdeiro
, and
Anke Weber
European countries have set ambitious goals to reduce their carbon emissions. These goals include a transition to electric vehicles (EVs)—a sector that China increasingly dominates globally—which could reduce the demand for Europe’s large and interconnected auto sector. This paper aims to size up the tradeoffs between Europe’s shift towards EVs and key macroeconomic outcomes, and analyze which policies may sharpen or ease them. Using state-of-the-art macroeconomic and trade models we analyze a scenario in which the share of Chinese cars in EU purchases rises by 15 percent over 5 years as a result of both a positive productivity shock for car production in China and a demand shock that shifts consumer preferences towards Chinese cars (given China’s dominance in the EV sector). We find that for the EU as a whole, the GDP cost of this shift is small in the short term, in the range of 0.2-0.3 percent of GDP, and close to zero over the long term. Adverse short-run effects are more significant for smaller economies heavily reliant on the car sector, mainly in Central Europe. Protectionist policies, such as tariffs on Chinese EVs, would raise the GDP cost of the EV transition. A further increase in Chinese FDI inflows that results in a significant share of Chinese EVs being produced in Central European economies, on the other hand, would offset losses in these economies by supporting their shift from supplying the internal combustion engine (ICE) production chain to that of EVs.
Keywords:
Electric vehicles; green transition; trade; tariffs; global value chains.; protectionist policy response; GDP cost; EV share; Europe's shift; shift to electric vehicles; Foreign direct investment; Productivity; Imports; Europe; 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 Selected Issues Papers
Bulgaria in Global Value Chains: Leveraging Integration with the EU: Bulgaria
Giacomo Magistretti
and
Iglika Vassileva
As a small open economy, Bulgaria benefits from economic exchanges with global partners. However, after a boost before the Global Financial Crisis and EU accession, its integration in global value chains has been growing only modestly in recent years and it remains particularly low when it comes to links with EU partners. To capitalize from the integration with the EU Single Market and exploit the opportunities that will come from joining the euro zone and the Schengen area, Bulgaria should focus on enhancing its non-cost competitiveness by improving its governance and investing in infrastructure and human capital.
Keywords:
Bulgaria; global value chains; forward linkages; backward linkages; international trade; machine learning; SHAP values; EU accession; EU single market; leveraging integration with the EU; EU country; links with EU; Exports; Foreign direct investment; Imports; Competition; Global
Cover IMF Working Papers
In Search of the Origin of Original Sin Dissipation
Bada Han
,
Jangyoun Lee
, and
Taehee Oh
In this paper, we examine how, contrary to the ‘original sin’ hypothesis, emerging market economies have gained the ability to borrow abroad in their local currency. We empirically analyze the relationship of various economic variables with local currency debt and identify three crucial conditions for the capacity to borrow in local currency: institutional quality, sufficient depth in the domestic bond market, and adequate performance in inflation targeting. While shares in JPMorgan Government Bond Index-Emerging Markets (GBI-EM) index also appear to be influential, the associations with local currency debt is less clear. We conduct a similar empirical analysis on portfolio equity, which represents a safer form of external liability than foreign currency debt, and verify that the depth of the equity market plays a key role in attracting foreign capital to domestic equity markets. Finally, we propose a simple portfolio model based on the inelastic market hypothesis to explain the positive correlation between capital market depth and the dissipation of original sin, which refers to the presence of more external liability in the form of equity or local currency debt. In essence, our analysis suggests that emerging market economies with reasonably strong fundamentals are not necessarily reliant on foreign currency debt.
Keywords:
Original Sin; Local Currency Debt; Emerging Markets; FX Market liquidity; annex C. optimal portfolio; equity original sin dissipation indices; equity portfolio investment; equilibrium portfolio determination; growth regression; Securities markets; Currency markets; Currencies; Currency crises; Global
Cover IMF Staff Country Reports
Belgium: Financial Sector Assessment Program-Technical Note on Regulation and Supervision of Less Significant Institutions
International Monetary Fund. Monetary and Capital Markets Department
This paper focuses on the technical note on regulation and supervision of less significant institutions in Belgium. The financial sector assessment program (FSAP) undertook a targeted review of Belgium’s Less Significant Institutions (LSI) and third-country branches (TCBs) banking regulation and supervision. The National Bank of Belgium (NBB) and Financial Services and Markets Authority have well-established processes for prudential, product and conduct supervision of LSIs. While NBB’s overall supervisory approach is adequate, the regulatory framework for corporate governance could be enhanced. Internal decision-making processes and the underpinning of certain decision proposal could in some specific instances be enhanced. With regard to NBB’s internal supervisory processes, some fine-tuning and continued attention could be useful. The NBB should continue to ensure adequate staffing for LSI and TCB supervision and continue to carefully consider how to address any supervisory Information Technology risk concerns. Banks’ internal capital target could usefully be added to the NBB’s internal monitoring. A structured approach for conduct risk and consumer protection information sharing with the FSMA and the Ministry of Economic Affairs should be put in place.
Keywords:
Belgium LSI sector; credit institution; market development; LSI sector; NBB governance Manual; Belgium's Less Significant Institutions; Financial Sector Assessment Program; External balance assessment (EBA); Bank supervision; Bank legislation; Global
Cover Policy Papers
Thirteenth Periodic Monitoring Report on The Status of Management Implementation Plans in Response to Board-Endorsed IEO Recommendations
International Monetary Fund. Office of Internal Audit
Overall, progress has been made since the Twelfth PMR on actions in response to eight IEO evaluations, with the pace of implementation being faster on actions October 31, 2023 THIRTEENTH PERIODIC MONITORING REPORT 2 INTERNATIONAL MONETARY FUND contained in the MIP in Response to the Executive Board-Endorsed Categorization of Open Actions in Management Implementation Plans. It is also worth mentioning that many open actions depend on the implementation of some important reviews/key steps that are expected to be completed in or soon after December 2023, such as the Capacity Development (CD) Strategy Review, the issuance of a new CD Guidance Note, an update of the Small Developing States Staff Guidance Note (SDS-SGN), the Operational Guidance Note (OGN) on Program Design and Conditionality, and a Board paper on Bank-Fund collaboration.
Keywords:
IEO evaluation; transparency policy; IEO recommendation; strategy review; Thirteenth PMR; Institutional View on capital flows; Capital flows; COVID-19; Capital account; Global; East Asia; Sub-Saharan Africa; Caribbean; Pacific Islands
Cover Staff Discussion Notes
Green Innovation and Diffusion: Policies to Accelerate Them and Expected Impact on Macroeconomic and Firm-Level Performance
Ms. Zeina Hasna
,
Ms. Florence Jaumotte
,
Jaden Kim
,
Samuel Pienknagura
, and
Gregor Schwerhoff
Innovation in low-carbon technologies (LCTs), which is essential in the fight against climate change, has slowed in recent years. This Staff Discussion Note shows that a global climate policy strategy can bolster innovation in, and deployment of, LCTs. Countries that expand their climate policy portfolio exhibit higher (1) climate-change-mitigation-patent filings, (2) LCT trade flows, and (3) “green” foreign direct investment flows. Importantly, boosting innovation in, and deployment of, LCTs yields medium-term growth, which mitigates potential costs from climate policies. This note stresses the importance of international policy coordination and cooperation by showcasing evidence of potential climate policy spillovers.
Keywords:
Low-carbon technologies; green innovation; technological diffusion and deployment; environmental policies; economic performance; portfolio exhibit; green FDI inflow; Policy implication; LCT trade; policy coordination; Climate policy; Foreign direct investment; Emerging and frontier financial markets; Climate change; Global
Cover Shocks and Capital Flows
Shocks and Capital Flows
Policy Responses in a Volatile World

Abstract

The high exposure of open economies to shocks makes them particularly vulnerable to volatile capital flows and advanced economy monetary policy spillovers. How should and do domestic policymakers respond? The traditional answer has been to use flexible exchange rates as a shock absorber. But flexible exchange rates may not offer full insulation when financial markets are imperfect. This book brings together recent empirical studies at the International Monetary Fund (IMF) on the effectiveness of different tools in responding to such shocks. The 18 chapters in this volume provide a rich background to the recently launched Integrated Policy Framework by the IMF. They comprise assessments of countries’ actual use of different tools, as well as in-depth evaluations of their effectiveness and side effects, covering macroprudential policies, monetary policy, foreign-exchange intervention, and capital flow management policies. Many of the studies involve new data and methods to tackle the inherently difficult problems in identifying and comparing the effects of policies under different circumstances. As a result, the volume offers the reader a comprehensive, in-depth coverage of the policy-oriented empirical research that has informed the development of a new way of thinking about open-economy macroeconomics at the IMF.

Keywords:
Capital flows; monetary policy; exchange rate policy; foreign exchange intervention; macroprudential policy; capital controls; FX debt; account restrictiveness; exchange rate intervention; IT regime; Exchange rates; Macroprudential policy instruments; Global; Asia and Pacific; Caribbean; Central America; Europe