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Europe > Ireland

You are looking at 1 - 10 of 309 items for :

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Cover Technical Notes and Manuals
The Case for (and Against) Asset Management Companies in Banking Crises
Miguel A Otero Fernandez
,
Jaime Ponce
,
Marc C Dobler
, and
Tomoaki Hayashi
This technical note explores the advantages and disadvantages of establishing state-sponsored centralized asset management companies (AMCs) to address high levels of bank asset distress during financial crises. AMCs may offer potential benefits like mitigating downward price spirals or achieving efficiency gains by consolidating creditor claims and scarce expertise. However, significant risks and costs warrant careful consideration. These include extreme uncertainties in asset valuation and substantial operational and financial risks. Past international experiences highlight the dangers of underestimating these risks, potentially turning the AMC into a mechanism for deferring losses to taxpayers, rather than minimizing them, and ultimately increasing long-term public costs and moral hazard. This technical note emphasizes these trade-offs and discusses crucial design elements for effective AMCs: a clear mandate, transfer pricing that prudently reflects asset values and disposal costs, strong governance with independent management, and efficient operational processes promoting transparency and accountability.
Keywords:
Asset Management Company (AMC); Bank resolution; Financial Crisis; Financial regulation and supervision; Problem Asset Resolution; Non-performing Loans; Bank restructuring.; asset price spiral; centralized asset management companies; give borrower; AMC need; AMC debt; bank asset distress; resolution strategy; recovery value; asset characteristic; Asset management companies; Distressed assets; Nonperforming loans; Asset valuation; Loans; Global
Cover Policy Papers
Operational Guidance Note On Program Design and Conditionality
International Monetary Fund. Strategy, Policy, & Review Department
This note aims to provide guidance on the key principles and considerations underlying the design of Fund-supported programs. The note expands on the previous operational guidance notes on conditionality published over 2003-2014, incorporating lessons from the 2018-19 Review of Conditionality, and other recent key policy developments including the recommendation of the Management’s Implementation Plan in response to Independent Evaluation Office (IEO)’s report on growth and adjustment in IMF-supported programs. The note in particular highlights operational advice to (i) improve the realism of macroeconomic forecast in programs and fostering a more systematic analysis of contingency plans and risks; (ii) improve the focus, depth, implementation, and tailoring of structural conditions (SCs), with due consideration of growth effects; and (iii) help strengthen the ownership of country authorities. Designed as a comprehensive reference and primer on program design and conditionality in an accessible and transparent manner, the note refers in summary to a broad range of economic and policy considerations over the lifecycle of Fund-supported programs. As with all guidance notes, the relevant IMF Executive Board Decisions remain the primary legal authority on matters covered in this note.
Keywords:
Conditionality; Conditionality guidelines; Use of Fund resources; Fund-supported adjustment programs; Debt sustainability analysis; Structural reform; Fragile and conflict-affected states; transparency policy; guidance note; Fund-supported program; financing gap; climate change policy assessment; policy note; existing IMF policy; financial support; Balance of payments need; Debt sustainability; Structural reforms; Global
Cover The IMF and the European Debt Crisis
The IMF and the European Debt Crisis
Harold James

Abstract

The book explores the Fund’s engagement in Europe in the aftermath of the 2008 global financial crisis, and especially after 2010. It explains how, why, and with what consequences the International Monetary Fund—along with the European Central Bank and the European Commission (together known as “the troika”)—supported adjustment programs in Greece, Ireland, Portugal, and Cyprus as well as helping to monitor Spain’s adjustment program and exploring modalities for supporting Italy. Additionally, it analyzes how the euro area developments interacted with and affected the rest of Europe, including not only eastern and southeastern Europe but also the United Kingdom, where the political fallout from post-financial crisis populism—in the form of “Brexit” from the European Union—was, in the end, the most extreme. The IMF’s European programs embroiled the Fund in numerous controversies over the exceptionally large lending, over whether or not to impose losses on private creditors, and over the mix between external financing and internal adjustment undertaken by program countries. They also required the IMF to confront longstanding questions about its governance and evenhandedness in the treatment of different segments of its membership. The crisis programs, with Greece, Ireland, Portugal and Cyprus, all revolved around debt sustainability. In the Greek case, after an intense internal debate, the IMF initially chose a program without debt reduction because it feared that such a program–even if ultimately in the interests of Greece, the client country–would trigger a panic of banks and other creditors and thus generate contagion for the rest of Europe. Learning from the Greek case, in Ireland and Portugal, the IMF pushed for debt reduction, to which the government in Ireland but not in Portugal was sympathetic. There was thus no private sector debt reduction in Ireland and Portugal. The European programs were caught up in big geopolitical debates about the appropriate role of the Fund in the aftermath of the global financial crisis. The book examines the intellectual and policy shifts that took place in the IMF as a result of the controversies about its European programs. It concludes with some reflections on how all the programs also produced genuine policy reform and held out the possibility of a return to growth and prosperity.

Keywords:
Debt; debt sustainability; bank crisis; deflation; IMF conditionality; policy reform; current account imbalances.; IMF mission; finance minister; IMF crisis lending; IMF official; stabilization plan; Debt restructuring; Sovereign bonds; Europe; Global; Eastern Europe; Baltics; East Asia
Cover IMF Staff Country Reports
Ireland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper provides an international perspective to the authorities’ two recent policy measures: setting up new savings and counter cyclical and climate infrastructure funds and reforming the judicial review of planning decisions in Ireland. The first essay presents international best practices in the design and operation of sovereign wealth funds that could inform the setup of the two new funds in Ireland. It highlights the importance of operating the funds within a strong fiscal policy framework. The second essay reviews Ireland’s planning and permitting system, underscoring the key elements that have hindered public investment. It also looks into the government’s proposed Bill to reform the planning system and contrasts its key features with those of other international jurisdictions. It finds that several issues may contribute to the inefficiencies in the planning and judicial review system, such as the loose standing requirements and lack of mandatory timelines related to judicial review, as well as institutional governance issues within the planning board, which the newly proposed reforms and legislative measures seek to address.
Keywords:
housing affordability; D. policy option; savings fund; modernizing judicial review; impulse response; Housing; Housing prices; Pension spending; Global
Cover IMF Staff Country Reports
Ireland: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. European Dept.
This 2023 Article IV Consultation highlights that Ireland’s economy has shown remarkable resilience in the face of consecutive shocks. The Irish economy has displayed remarkable resilience in the face of recent consecutive shocks and is well-positioned to achieve a soft landing. Growth is expected to moderate to a still solid level in 2023-24, from a very high base, as tighter financial conditions, domestic capacity constraints, and weakening external demand weigh on the economy. Continued fiscal prudence is warranted to complement monetary tightening in sustaining disinflation and to build adequate buffers for the future. As fiscal policy should avoid adding to aggregate demand amid still elevated inflation, tax revenue over performance should be saved. The 2023 fiscal stance is appropriate. Fiscal policy should support growth-enhancing investment and broaden the tax base. The authorities’ decision to save part of excess corporate income tax revenues in two savings funds is welcome. Tighter financial conditions, persistent inflation, and rising vulnerabilities in the commercial real estate market with linkages to leveraged non-banks call for continued heightened vigilance of financial stability risks.
Keywords:
liability positions vis-à-vis nonresident; inflation development; transparency policy; money market rate; quarterly balance of payments; growth-enhancing investment; Medium-term fiscal policy; persistent inflation; Ireland's economy; Housing; Inflation; Corporate income tax; Credit; Global
Cover IMF Staff Country Reports
Nordic-Baltic Regional Report: Technical Assistance Report-Nordic-Baltic Technical Assistance Project Financial Flows Analysis, AML/CFT Supervision, and Financial Stability
International Monetary Fund. Legal Dept.
This paper presents a regional report on Nordic-Baltic technical assistance project: financial flows analysis, Anti-Money Laundering and combating the Financing of Terrorism (AML/CFT) Supervision, and Financial Stability. The purpose of the project is to conduct an analysis of cross-border ML threats and vulnerabilities in the Nordic-Baltic region—encompassing Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden (the Nordic-Baltic Constituency or NBC)—and issue a final report containing recommendations for mitigating the potential risks. The financial flows analysis presented in this report is based on the IMF staff’s analysis of cross-border payments data. Six out of the eight Nordic-Baltic countries have seen an increase in aggregate flows since 2013. Monitoring cross-border financial flows provides countries with a deeper understanding of their external ML threat environment and evolving cross-border related risks they are facing. Leveraging broader analysis of ML/TF cross-border risk, the Nordic-Baltic countries should develop their own understanding of higher-risk countries reflecting country-specific ML/TF threats.
Keywords:
TF risk assessment; colleges participation; TF risk; EU Anti-Money Laundering Authority; supervisory cooperation; information Sharin; Anti-money laundering and combating the financing of terrorism (AML/CFT); Virtual currencies; Correspondent banking; Internal controls; Financial sector stability; Baltics; Global
Cover IMF Working Papers
The Economics of Sovereign Debt, Bailouts, and the Eurozone Crisis
Pierre-Olivier Gourinchas
,
Philippe Martin
, and
Todd Messer
Despite a formal ‘no-bailout clause,’ we estimate significant net present value transfers from the European Union to Cyprus, Greece, Ireland, Portugal, and Spain, ranging from roughly 0.5% (Ireland) to a whopping 43% (Greece) of 2010 output during the Eurozone crisis. We propose a model to analyze and understand bailouts in a monetary union, and the large observed differences across countries. We characterize bailout size and likelihood as a function of the economic fundamentals (economic activity, debt-to-gdp ratio, default costs). Our model embeds a ‘Southern view’ of the crisis (transfers did not help) and a ‘Northern view’ (transfers weaken fiscal discipline). While a stronger no-bailout commitment reduces risk-shifting, it may not be optimal from the perspective of the creditor country, even ex-ante, if it increases the risk of immediate insolvency for high debt countries. Hence, the model provides a potential justification for the often decried policy of ‘kicking the can down the road.’ Mapping the model to the estimated transfers, we find that the main purpose of the outsized Greek bailout was to prevent an exit from the eurozone and possible contagion. Bailouts to avoid sovereign default were comparatively modest.
Keywords:
Euro area; Monetary Union; Sovereign debt; bailouts; Eurozone crisis; bailout size; no-bailout clause; debt country; debtor country; Monetary unions; Loans; Collateral; Debt default; Global
Cover IMF Staff Country Reports
Euro Area Policies: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper highlights quantitative tightening (QT) by the European Central Bank (ECB). It uses evidence from the literature on the impact of central bank bond purchases and sales on bond yields, and the monetary policy stance, to outline a roadmap for reducing the Euro system’s bond holdings. The current tightening cycle provides an opportunity to revisit the ECB’s balance sheet policy. With inflation running above target, the monetary accommodation provided by the ECB’s bond holding is no longer necessary. The current tightening cycle provides an opportunity to revisit the ECB’s balance sheet policy. With inflation running above target, the monetary accommodation provided by the ECB’s bond holding is no longer necessary. The paper concludes that the ECB’s short term policy rates should be the main choice for adapting the monetary policy stance to changing circumstances and QT should proceed in a gradual, predictable manner as outlined by the ECB.
Keywords:
ECB Policy rate; ECB balance sheet; app portfolio; C. Policy consideration; bond supply net of ECB; Financial statements; Unconventional monetary policies; Central bank policy rate; Monetary stance; Securities
Cover IMF Working Papers
The Right Tool for the Job? Mortgage Distress and Personal Insolvency during the European Debt Crisis
Mr. Wolfgang Bergthaler
,
Jose M Garrido
, and
Anjum Rosha
The European debt crisis in the early to mid 2010s brought to the fore the issue of household debt distress: in the countries affected, widespread over-indebdtedness resulted in serious financial and social challenges. The crisis was primarily a mortgage debt crisis, but in several cases, the legal response was based on the introduction of personal insolvency procedures. This paper examines the challenges in designing and implementing legal reforms in this area to promote a better understanding of the main considerations in resolving personal insolvency and distressed mortgage debt in the context of crises. Lessons from the European crisis may prove valuable when dealing with the aftermath of the COVID-19 pandemic and the war in Ukraine on household debt distress.
Keywords:
consumer insolvency; household debt; mortgage debt; consumer debt; household debt distress; mortgage debt crisis; B. mortgage debt distress; mortgage distress; Solvency; Mortgages; Corporate insolvency; Debt sustainability; Debt settlement; Europe
Cover IMF Working Papers
Derivative Margin Calls: A New Driver of MMF Flows
Maddalena Ghio
,
Linda Rousova
,
Dilyara Salakhova
, and
German Villegas Bauer
During the March 2020 market turmoil, euro area money-market funds (MMFs) experienced significant outflows, reaching almost 8% of assets under management. This paper investigates whether the volatility in MMF flows was driven by investors’ liquidity needs related to derivative margin payments. We combine three highly granular unique data sources (EMIR data for derivatives, SHSS data for investor holdings of MMFs and Refinitiv Lipper data for daily MMF flows) to construct a daily fund-level panel dataset spanning from February to April 2020. We estimate the effects of variation margin paid and received by the largest holders of EURdenominated MMFs on flows of these MMFs. The main findings suggest that variation margin payments faced by some investors holding MMFs were an important driver of the flows of EUR-denominated MMFs domiciled in euro area.
Keywords:
liquidity risk; money market funds; big data; interconnectedness; non-bank financial intermediaries.; EUR-denominated MMFs; derivative margin calls; MMF flow; variation margin payment; VM flow; Stocks; Liquidity; Mutual funds; Nonbank financial institutions; Pension spending; Global; IMF working paper research Department; derivatives reform; margin payment; Derivative markets