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Europe > Switzerland

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Foreign exchange market x
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Cover IMF Working Papers
International Capital Flow Pressures
Ms. Linda S. Goldberg
and
Signe Krogstrup
This paper presents a new measure of capital flow pressures in the form of a recast Exchange Market Pressure index. The measure captures pressures that materialize in actual international capital flows as well as pressures that result in exchange rate adjustments. The formulation is theory-based, relying on balance of payments equilibrium conditions and international asset portfolio considerations. Based on the modified exchange market pressure index, the paper also proposes the Global Risk Response Index, which reflects the country-specific sensitivity of capital flow pressures to measures of global risk aversion. For a large sample of countries over time, we demonstrate time variation in the effects of global risk on exchange market pressures, the evolving importance of the global factor across types of countries, and the changing risk-on or risk-off status of currencies.
Keywords:
WP; exchange rate; base currency; net capital; Exchange Market Pressure; Risk aversion; Safe haven; Capital flows; Foreign Exchange Reserves; flow pressure; capital flow pressure; outflow pressure; exchange rate elasticity; exchange rate data; reserves change; capital flow data; appreciation pressure; currency experiences appreciation pressure; capital outflow pressure; flow data; Home exchange rate depreciation; Currencies; Exchange rates; International reserves; Currency markets; Global
Cover IMF Working Papers
Financial Contagion Through Bank Deleveraging: Stylized Facts and Simulations Applied to the Financial Crisis
Mr. Thierry Tressel
The financial crisis has highlighted the importance of various channels of financial contagion across countries. This paper first presents stylized facts of international banking activities during the crisis. It then describes a simple model of financial contagion based on bank balance sheet identities and behavioral assumptions of deleveraging. Cascade effects can be triggered by bank losses or contractions of interbank lending activities. As a result of shocks on assets or on liabilities of banks, a global deleveraging of international banking activities can occur. Simple simulations are presented to illustrate the use of the model and the relative importance of contagion channels, relying on bank losses of advanced countries’ banking systems during the financial crisis to calibrate the shock. The outcome of the simulations is compared with the deleveraging observed during the crisis suggesting that leverage is a major determinant of financial contagion.
Keywords:
WP; interbank market; asset; Financial Contagion; Deleveraging; Funding Shocks; Network Analysis; bank level; banks liability; bank capital outflow; bank assets; parent bank; risk exposure; Foreign banks; Commercial banks; Foreign currency exposure; Emerging and frontier financial markets; Asset liquidity; Eastern Europe; Central and Eastern Europe; Global
Cover IMF Working Papers
FX Swaps: Implications for Financial and Economic Stability
Ms. Li L Ong
and
Ms. Bergljot B Barkbu
The proliferation of foreign exchange (FX) swaps as a source of funding and as a hedging tool has focused attention on the role of the FX swap market in the recent crisis. The turbulence in international money markets spilled over into the FX swap market in the second-half of 2007 and into 2008, giving rise to concerns over the ability of banks to roll over their funding requirements and manage their liquidity risk. The turmoil also raised questions about banks' ability to continue their supply of credit to the local economy, as well as the external financing gap it could create. In this paper, we examine the channels through which FX swap transactions could affect a country's financial and economic stability, and highlight the strategies central banks can employ to mitigate market pressures. While not offering any judgment on the instrument itself, we show that the use of FX swaps for funding and hedging purposes is not infallible, especially during periods of market stress.
Keywords:
WP; swap line; FX swap; market; interest rate
Cover IMF Working Papers
International Financial Flows and Transactions Taxes: Survey and Options
Mr. P. Bernd Spahn
Tobin has suggested that exchange rate volatility be controlled through a tax on international financial transactions. This analysis shows that the Tobin tax as a pure transaction tax is not viable. The tax would impair financial operations and create international liquidity problems. It is also unlikely to deter speculation. However, a possible alternative would be a two-tier rate structure—consisting of a low-rate transaction tax plus an exchange surcharge. The exchange rate could move freely within a “crawling” exchange rate band, but overshooting the band would trigger a tax on an “externality,” which is the discrepancy between the market exchange rate and the closest margin of the band. The scheme is inspired by the European Monetary System. However, exchange rates would be kept within the target range through a tax, not through interest policy or central bank sterilization and, eventually, the depletion of international reserves.
Keywords:
WP; transactions tax; interest rate; foreign exchange; spot market; tax rate; Tobin tax; rate of return; exchange surcharge; cost of capital; stamp tax; tax loophole; round-trip tax; uniform transaction tax; tax discrimination; equalization tax; Currencies; Exchange rates; Currency markets; Transaction tax; Financial transaction tax; Global
Cover IMF Working Papers
Adopting Currency Convertibility: Experiences and Monetary Policy Considerations for Advanced Developing Countries
Peter J. Quirk
This paper analyses issues for developing countries with structurally sound balance of payments that are considering a move to full currency convertibility. The main experiences of industrial countries in their decontrol of international capital transactions are reviewed, with an emphasis on the implications for monetary policy. The paper deals both with stabilization, and the prudential issues, which are especially important in view of the potential for speculative bubbles. Respective roles of the international organizations, IMF, OECD, and the GATT, in assisting the capital liberalization process are discussed.
Keywords:
WP; exchange rate; liberalization; market; monetary policy; convertibility; exchange market intervention; liberalization process; currency liberalization; capital liberalization; New Zealand liberalization; interest rate reform; market opening measure; liberalization of currency control; capital convertibility; sequencing convertibility; exchange control apparatus; credit rationing; Exchange rates; Domestic credit; Capital inflows; Currency convertibility; Capital controls
Cover IMF Working Papers
The Use of Foreign Exchange Swaps by Central Banks: A Survey
Ms. Catharina J. Hooyman
The paper discussed the use of foreign exchange swaps by central banks. Such use has aimed at affecting domestic liquidity, managing foreign exchange reserves, and stimulating domestic financial markets. It discusses these different uses and present evidence for a selected group of countries. The paper cautions about the use of foreign exchange swaps to defend a particular exchange rate at a time when foreign exchange reserves are under pressure. It notes, finally, that use of foreign exchange swaps by central banks has been losing importance.
Keywords:
WP; swap; currency; dollar; market; U.S. dollar; swap operation; swap transaction; forward market; Turkish lira; Fed issues dollar; profit and loss account; swap facility; Kuwaiti dinar; central bank loss; U.S. dollar swap facility; central bank need; Currency swaps; Currency markets; Currencies; Exchange rates; Africa; Global
Cover IMF Working Papers
Exchange Rate Forecasting Techniques, Survey Data, and Implications for the Foreign Exchange Market
International Monetary Fund
This paper examines the dynamics of the foreign exchange market. The first half addresses a number of key questions regarding the forecasts of future exchange rates made by market participants, by means of updated estimates using survey data. Here we follow most of the theoretical and empirical literature in acting as if all market participants share the same expectation. The second half then addresses the possibility of heterogeneous expectations, particularly the distinction between “chartists” and “fundamentalists,” and the implications for trading in the foreign exchange market and for the formation of speculative bubbles.
Keywords:
WP; exchange rate; investor; rate; exchange risk premium; deutsche mark; trading room; British pound; standard deviation; market participant; Return on investment; Currency markets; Exchange rates; Depreciation; Global
Cover Selected Decisions (6th Ed)
Selected Decisions (6th Ed)
International Monetary Fund

Abstract

This volume, entitled Selected Decisions of the IMF and Selected Documents, follows the Fifth Issue of Selected Decisions of the Executive Directors and Selected Documents. The change in title has been made because of the inclusion of more Resolutions of the Board of Governors of the Fund than in the preceding volume. The present volume contains selected decisions and interpretations of the Executive Directors and resolutions of the Board of Governors of the IMF adopted prior to September 30, 1972, as well as certain selected documents of the Fund and of the United Nations to which frequent reference is made. With few exceptions, the decisions are of a general nature and relate to certain obligations, policies, and procedures under the Articles of Agreement. This issue contains most of the decisions that were published in earlier issues (September 1962, September 1963, January 1965, April 1970, and July 1971), and general decisions taken since then.

Keywords:
SELD; Fund; transaction; matter of interpretation; exchange transaction; representative exchange rate; capital transfer; net income of the fund; Currencies; Gold; Multiple currency practices; Exchange rates; Currency convertibility; Africa; Reserve assets
Cover Selected Decisions (4th Ed)
Selected Decisions (4th Ed)
International Monetary Fund

Abstract

This paper presents Selected Decisions and Selected Documents’ Fourth Issue of the IMF. In order to ensure the uniform application of the relevant Articles of Agreement as they apply to determinations of member's net official holdings of gold and US dollars for the purposes of Article III, Section 3(&)(ii), the IMF adopts or reaffirms several principles of interpretation for the indicated provisions of the IMF Agreement. Each member shall furnish to the IMF the data necessary to determine its net official holdings of gold and United States dollars. The IMF does not intend to apply the rules set forth in II to its holdings of members' currencies having fluctuating rates when there is no practical interest for the IMF or members to do so. In order to avoid misunderstanding, it may be useful to point out that these rules do not constitute a formula for dealing with the currencies of countries in which current transactions are conducted at multiple rates.

Keywords:
SELD; transaction; exchange transaction; matter of interpretation; decision No. 1238; capital transfer; payment of interest; Currencies; Gold; Multiple currency practices; Exchange rates; Currency convertibility; Africa; Reserve assets