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Business and Economics > Finance: General

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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 FinTech Notes
Tokenization and Financial Market Inefficiencies
Itai Agur
,
German Villegas Bauer
,
Tommaso Mancini-Griffoli
,
Maria Soledad Martinez Peria
, and
Brandon Tan
Most financial assets are digital today. Tomorrow, they may be tokenized. Tokenization implies recording and transferring assets on a widely shared and trusted digital ledger that can be programmed. Interest in tokenization is strong and experiments abound, but what are the consequences of this new trend for financial markets? This note introduces a taxonomy and a conceptual framework centered on market inefficiencies to evaluate this question. Some inefficiencies could decline across the asset life cycle. Others would remain, however, and new ones could emerge. Issuing, servicing, and redeeming assets might involve fewer intermediaries and thus become cheaper. The costs of trading assets may also decrease as tokenization lowers some counterparty risks and search frictions and offers flexibility in settlement. Additionally, greater competition among brokers could lower transaction fees. However, tokenization may amplify shocks if it induces institutions to become more interconnected and hold lower liquidity buffers or higher leverage, potentially jeopardizing financial stability. Programs themselves may introduce new risks related to strings of contingent contracts or faulty code. While competition may grow among financial intermediaries, the provision of market infrastructure could become more concentrated due to network effects.
Keywords:
Tokenization; central banks; asset lifecycle; financial markets; financial asset market friction; B. market infrastructure investment externality; financial market inefficiency; IMF Library; Note 2025/001; D. knowledge externality; Bonds; Smart contracts; Securities markets; Liquidity; Blockchain and DLT; Global
Cover IMF Staff Country Reports
Republic of Congo: Request for an Extension of the Extended Credit Facility Arrangement-Staff Report
International Monetary Fund. African Dept.
The authorities have requested a three-month extension of the Extended Credit Facility (ECF) arrangement set to expire on January 20, 2025. The three-year arrangement was approved by the Executive Board on January 21, 2022, with access of SDR 324.0 million (200 percent of quota). The extension seeks to allow sufficient time to complete the sixth (and final) review. The additional time needed would allow: (i) the authorities to complete remaining reforms; (ii) staff and the authorities to reach understandings on appropriate policies to support the completion of the 6th ECF review for the Republic of Congo, prepare documents and circulate them for Board consideration; and (iii) the Executive Board to discuss the review of regional policies and policy assurances for CEMAC, which is critical for the success of Congo’s Fund-supported program.
Keywords:
IMF's transparency policy; ECF arrangement; liquidity pressure; ECF review; reform progress; filets Sociaux; Inclusive growth; Government debt management; Revenue mobilization; Liquidity
Cover Policy Papers
Considerations for the Comprehensive Review of Access Limits
International Monetary Fund. Strategy, Policy, & Review Department
,
International Monetary Fund. Finance Dept.
, and
International Monetary Fund. Legal Dept.
This paper provides background for an informal discussion to engage with Executive Directors, held on November 26, 2024, on the Comprehensive Review of GRA Access Limits. The General Resources Account (GRA) access limits are part of the Fund’s risk management framework. They help maintain a balance between the need to: (i) ensure that members have confidence in the availability of Fund financing; and (ii) preserve liquidity and the revolving nature of the Fund’s resources.
Keywords:
risk management framework; GRA lending commitment; transparency policy; managing transition; enterprise risk consideration; risk tolerance; financing needs; Credit; Liquidity; Credit risk; COVID-19; Global
Cover Policy Papers
Comprehensive Review of GRA Access Limits
International Monetary Fund. Strategy, Policy, & Review Department
,
International Monetary Fund. Finance Dept.
, and
International Monetary Fund. Legal Dept.
On December 17, 2024, the IMF’s Executive Board concluded the Comprehensive Review of General Resources Account (GRA) Access Limits. The review maintained the overall annual and cumulative GRA access limits at 200 and 600 percent of current quotas, respectively, keeping them unchanged from the existing temporary limits that were set to expire at the end of 2024. These limits constitute a 38 percent increase relative to the limits set in the previous comprehensive review in 2016. The Board also approved adjustments to the access limits when the general conditions of the quota increase under the 16th General Review of Quotas are met and agreed that the next Review is expected to take place on the standard five-year review cycle, with flexibility to conduct it earlier if circumstances warrant. Access limits are a key element of the Fund’s risk management framework. Overall GRA access limits are not ceilings but thresholds for enhanced scrutiny and safeguards through the exceptional access framework. Two staff papers informed the Executive Board’s informal engagement (November) and the formal meeting (December) on this review.
Keywords:
Lending; access limits; Use of Fund Resources; Balance of Payments need; GRA; RST; annexes II; transparency policy; FCL user; threshold of the Flexible Credit Line; PRGT credit threshold; Liquidity; COVID-19; Global
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
Ghana: Third Review Under the Arrangement Under the Extended Credit Facility, Request for Modification of Performance Criteria, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Ghana
International Monetary Fund. African Dept.
This page presents Ghana’s Third Review under the Arrangement under the Extended Credit Facility, Request for Modification of Performance Criteria, and Financing Assurances Review. Ghana’s performance under the program has been generally satisfactory, and reform efforts are paying off. Good progress has been made on debt restructuring. Growth is recovering rapidly, inflation has declined, although at a slower pace, and the fiscal and external positions have continued to improve. Steadfast implementation of the policy and reform agenda, including before and after the upcoming general elections, remains essential to fully restore macroeconomic stability and debt sustainability. The Ghanaian authorities have continued to make remarkable headways on their public debt restructuring. After successfully restructuring domestic debt last year and reaching agreement on a Memorandum of Understanding with Ghana’s Official Creditors Committee under the G20 Common Framework in June 2024, the government has completed the exchange of its Eurobonds at conditions consistent with program parameters. The authorities have taken appropriate actions to ensure implementation of banks’ recapitalization plans and start recapitalizing state-owned banks.
Keywords:
Ghana Financial sector fund; Policy adjustment; flagship program; cash management framework; tenacious implementation; Debt restructuring; Energy sector; Debt sustainability analysis; Global; Middle East
Cover Finance & Development
Finance & Development, December 2024: Finance & Development, December 2024
International Monetary Fund. Communications Department
Finance & Development, December 2024
Keywords:
housing sector; IMF photo; affordability crisis; cotton textile industry; housing supply; Housing prices; Housing; Mortgages; Global financial crisis of 2008-2009; Global; Africa; Caribbean; Europe; Middle East