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Europe > Switzerland

You are looking at 1 - 10 of 26 items for :

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Cover IMF Working Papers
Central Banks Casting a Global Financial Safety Net: What Drives the Supply of Bilateral Swaps?
Jakree Koosakul
and
Alexei Miksjuk
The expansion of bilateral swap arrangements (BSAs) since the Global Financial Crisis has led to a substantial reconfiguration of the Global Financial Safety Net (GFSN). This paper examines the drivers of BSA supply using a novel dataset on all publicly documented BSAs. It finds that countries with well-developed financial markets and institutions and high trade openness are more likely to backstop other economies by establishing BSAs. In addition, their choice of BSA counterparts is driven by strong investment and trade exposures to these countries, with variation in the relative importance of these factors across major BSA providers. The paper shows that geopolitical considerations often affect such decisions, as BSAs are less likely to be established between geopolitically distant countries and more likely between countries in the same regional economic bloc.
Keywords:
Bilateral swap arrangements; geoeconomic fragmentation; global financial safety net; liquidity provision; BSA supply; BSA source country; GFSN evolution; BSA counterpart; Liquidity; Financial sector development; Financial safety nets; International reserves; Global financial crisis of 2008-2009; Global
Cover IMF Staff Country Reports
Switzerland: Selected Issues
International Monetary Fund. European Dept.
Selected Issues
Keywords:
D. policy implication; policies equity; liquidity gap; liquidity shortfall; solvency risk; Housing prices; Foreign assets; Pension spending; Retirement; Global financial crisis of 2008-2009; Global; Europe
Cover IMF Working Papers
Handle with Care: Regulatory Easing in Times of COVID-19
Mr. Fabian Valencia
,
Mr. Richard Varghese
,
Weijia Yao
, and
Juan Yepez
The policy response to the COVID-19 shock included regulatory easing across many jurisdictions to facilitate the flow of credit to the economy and mitigate a further ampli-fication of the shock through tighter financial conditions. Using an intraday event study,this paper examines how stock prices—a key driver in financial conditions—reacted to regulatory easing announcements in a sample of 18 advanced economies and 8 emerging markets. The paper finds that overall, regulatory easing announcements contributed to looser financial conditions, but effects varied across sectors and tools. Financial regulatory easing led to lower valuations for financial sector stocks, and higher valuations for non-financial sector stocks, particularly for industries that are more dependent on bank financing. Furthermore, valuations declined and financial conditions tightened following announcements related to easier bank capital regulation while equity valuation rose and financial conditions loosened after those about liquidity regulation. Effects from non-regulatory financial measures appear to be generally more muted.
Keywords:
Stock prices; policy announcements; financial conditions; capital; liquidity; COVID-19.; WP; liquidity regulation easing; regulation announcement; announcement dummy; equity price; market reaction
Cover IMF Working Papers
Public Debt and r - g at Risk
Weicheng Lian
,
Mr. Andrea F Presbitero
, and
Ursula Wiriadinata
As interest rate-growth differentials (r-g) turned negative in many countries, governments consider pursuing fiscal expansion and the potential risks involved. Using a large sample of advanced and emerging economies, our analysis suggests that high public debts can lead to adverse future r-g dynamics. Specifically, countries with higher initial public debt experience (i) a shorter duration of negative r-g episodes and a higher probability of reversal, (ii) higher average r-g, and (iii) a more right-skewed r-g distribution, that implies higher down-side risks. Furthermore, high-debt countries experience larger increases in interest rates in response to (iv) an unexpected decline in domestic output and (v) an increase of global volatility. Results are stronger when public debts are denominated in foreign currencies.
Keywords:
WP; interest rate-growth differential; debt country; interest-rate response; interest rates environment; U.S. dollar; Public debt; Interest rate-growth differential; Shocks; Fiscal policy; Foreign currency debt; FX share group; public debt-to-GDP; Long term interest rates; Currencies; Global
Cover IMF Staff Country Reports
Switzerland: Financial Sector Assessment Program; Technical Note- Financial Safety Net and Crisis Management Arrangements
International Monetary Fund. Monetary and Capital Markets Department
Financial Sector Assessment Program; Technical Note- Financial Safety Net and Crisis Management Arrangements
Keywords:
ISCR; CR; State secretariat; insurance fund; financial market; resolution power; steering committee; bridge bank tool; payout capability; government guarantee; State secretary; financial support; pertinent divisions meet; FINMA CEO; deposit insurance; Bank resolution framework; Bank resolution; Lender of last resort; Crisis management framework; Global
Cover IMF Working Papers
Covered Interest Parity Deviations: Macrofinancial Determinants
Mr. Eugenio M Cerutti
,
Mr. Maurice Obstfeld
, and
Haonan Zhou
For about three decades until the Global Financial Crisis (GFC), Covered Interest Parity (CIP) appeared to hold quite closely—even as a broad macroeconomic relationship applying to daily or weekly data. Not only have CIP deviations significantly increased since the GFC, but potential macrofinancial drivers of the variation in CIP deviations have also become significant. The variation in CIP deviations seems to be associated with multiple factors, not only regulatory changes. Most of these do not display a uniform importance across currency pairs and time, and some are associated with possible temporary considerations (such as asynchronous monetary policy cycles).
Keywords:
WP; U.S. dollar; cross-currency basis; cross-currency dollar basis; basis calculation; Covered Interest Parity; Interest Rate Differentials; Forward FX Market; dollar strength; investment option; time-series regression; dollar appreciation; Interest rate parity; Currencies; Global financial crisis of 2008-2009; Interbank rates; Money markets; Global
Cover IMF Working Papers
Can Good Governance Lower Financial Intermediation Costs?
Mariusz Jarmuzek
and
Mr. Tonny Lybek
This paper argues that better governance practices can reduce the costs, risks and uncertainty of financial intermediation. Our sample covers high-, middle- and low-income countries before and after the global financial crisis (GFC). We find that net interest margins of banks are lower if various governance indicators are better. More cross-border lending also appears conducive to lower intermediation costs, while the level of capital market development is not significant. The GFC seems not to have had a strong impact except via credit risk. Finally, we estimate the size of potential gains from improved governance.
Keywords:
WP; intermediation cost; bank-dealership model; bank characteristic; banks capital; transaction size; financial intermediation costs; governance; corruption; bank-dealership framework; Credit risk; Global financial crisis of 2008-2009; Capital markets; Competition; Inflation; Global
Cover IMF Working Papers
Where Have All the Profits Gone? European Bank Profitability Over the Financial Cycle
Ms. Enrica Detragiache
,
Mr. Thierry Tressel
, and
Ms. Rima A Turk
The paper investigates EU banks’ profitability through the recent financial cycle using banklevel balance sheet and income statement data. We find that banks that were more successful at protecting their profits had a less pronounced deterioration in loan quality and a larger improvement in cost efficiency. They also downsized their assets more aggressively during the crisis, and reduced reliance on wholesale funding more markedly post-crisis. Net interest margins remained broadly stable over the financial cycle, including post-crisis, and there is no clear evidence that aspects of bank business model, such as higher reliance on fees and commission income, were associated with better profitability post-crisis.
Keywords:
WP; bank; EU bank; profitability; Financial Cycle; Bank Profitability; Financial Crisis; bank characteristic; bank leverage; bank asset; return on equity; profit growth; bank performance; Bank soundness; Financial cycles; Personal income; Nonperforming loans; Global systemically important banks; Global
Cover IMF Working Papers
Friend or Foe? Cross-Border Linkages, Contagious Banking Crises, and “Coordinated” Macroprudential Policies
Mr. Seung M Choi
,
Ms. Laura E. Kodres
, and
Jing Lu
This paper examines whether the coordinated use of macroprudential policies can help lessen the incidence of banking crises. It is well-known that rapid domestic credit growth and house price growth positively influence the chances of a banking crisis. As well, a crisis in other countries with high trade and financial linkages raises the crisis probability. However, whether such “contagion effects” can operate to reduce crisis probabilities when highly linked countries execute macroprudential policies together has not been fully explored. A dataset documenting countries’ use of macroprudential tools suggests that a “coordinated” implementation of macroprudential policies across highly-linked countries can help to stem the risks of widespread banking crises, although this positive effect may take some time to materialize.
Keywords:
WP; break; banking crisis; center; house price growth; Trade Linkages; Financial Linkages; Financial Crisis; Macroprudential Policies; trade partner; credit growth; loan recipient; crisis probability; Housing prices; Banking crises; Credit; Macroprudential policy; Macroprudential policy instruments; Global
Cover IMF Working Papers
Whose Credit Line is it Anyway: An Update on Banks' Implicit Subsidies
Tryggvi Gudmundsson
The post-crisis financial sector framework reform remains incomplete. While capital and liquidity requirements have been strengthened, doubts remain over other aspects, including the fact that expectations of government support for systemically-important banks (SIBs) remain intact. In this paper, we use a jump diffusion option-pricing approach to provide estimates of implicit subsidies gained by these banks due to the expectation of protection to creditors provided by governments. While these subsidies have declined in the post-crisis era as volatility has declined and capital levels have increased, they remain non-trivial. Even conservative parameterizations of default and loss probabilities lead to macroeconomically significant figures.
Keywords:
WP; fair value; Implicit subsidies; systemically-important banks; capital regulation; bank assets; asset price assumption; asset volatility; recovery rate; bank's assets; market value of assets; value destruction; Asset prices; Stocks; Asset valuation; Global systemically important banks; Global