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Europe > Iceland

You are looking at 1 - 10 of 36 items for :

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Cover IMF Staff Country Reports
Iceland: Financial Sector Assessment Program-Technical Note on Financial Safety Net Crisis Management
International Monetary Fund. Monetary and Capital Markets Department
This technical note focuses on financial safety net crisis management in Iceland. This paper assesses and makes recommendations regarding the different elements of the financial safety net in Iceland. The scope of the assessment includes the institutional arrangements for recovery, resolution, and crisis management; the oversight of banks’ recovery plans; the legal regime for bank bankruptcy and resolution; resolution planning by the authorities; the funding mechanism to support resolution; the deposit guarantee scheme; and the government authorities’ collective preparedness to deal with financial crises. The current institutional framework for crisis management lacks formal involvement of the Ministry of Finance. The regime for banks that are systemic adheres to the internationally agreed resolution standards. The legal regime for bankruptcy and liquidation of banks that are not systemic is sound. The Deposit Guarantee Fund should be strengthened in line with EU requirements of the Deposit Guarantee Scheme Directive. Finally, the authorities’ collective contingency planning for financial crisis (including testing of plans) should be intensified.
Keywords:
B. bank insolvency; recovery planning; financial crisis preparedness; asset portfolio; market funding; resolution plan; Bank resolution framework; Lender of last resort; Bank resolution; Financial sector stability; Baltics; Europe
Cover IMF Working Papers
Capital Controls in Times of Crisis – Do They Work?
Apoorv Bhargava
,
Romain Bouis
,
Annamaria Kokenyne
,
Manuel Perez-Archila
,
Umang Rawat
, and
Ms. Ratna Sahay
This paper provides an analysis of the use and effects of capital controls in 27 AEs and EMDEs which experienced at least one financial crisis between 1995 and 2017. Countries often turn to using capital controls in crisis: some ease inflow controls while others tighten controls on outflows. A key finding is that countries with pervasive controls before the start of the crisis are shielded compared to countries with more open capital accounts, which see a significant decline in capital flows during crises. In contrast, the effectiveness of capital controls introduced during crises appears to be weak and difficult to identify. There is also some evidence that the introduction of outflow controls during crises is negatively associated with sovereign debt ratings, but that investors may actually forgive with time.
Keywords:
Capital controls; capital outflows; financial crises; inflow control; outflow controls Introduced; outflow control; controls on outflow; tightening control; Capital account; Capital flows; Caribbean; Global
Cover Staff Discussion Notes
A Post-Pandemic Assessment of the Sustainable Development Goals
Ms. Dora Benedek
,
Mr. Edward R Gemayel
,
Mr. Abdelhak S Senhadji
, and
Alexander F. Tieman
The COVID-19 pandemic hit countries’ development agendas hard. The ensuing recession has pushed millions into extreme poverty and has shrunk government resources available for spending on achieving the United Nations Sustainable Development Goals (SDGs). This Staff Discussion Note assesses the current state of play on funding SDGs in five key development areas: education, health, roads, electricity, and water and sanitation, using a newly developed dynamic macroeconomic framework.
Keywords:
Sustainable Development Goals, Development, Fiscal Policy, Structural Reform; policy option; composite index; case study countries' SDG spending; financing gap; SDG performance; analysis of development strategy; Sustainable Development Goals (SDG); COVID-19; Human capital; Emerging and frontier financial markets; Infrastructure; Sub-Saharan Africa; Global
Cover IMF Working Papers
External Financing Risks: How Important is the Composition of the International Investment Position?
Mr. Luis M. Cubeddu
,
Mrs. Swarnali A Hannan
, and
Mr. Pau Rabanal
Building on the vast literature, this paper focuses on the role of the structure of the international investment position (IIP) in affecting countries’ external vulnerabilities. Using a sample of 73 advanced and emerging economies and new database on the IIP’s currency composition, we find that the size and structure of external liabilities and assets, especially with regards to currency denomination, matter in understanding balance-of-payments pressures. Specifically, and beyond the standard macroeconomic factors highlighted in other studies, higher levels of gross external debt increase the likelihood of an external crisis, while higher levels of foreign-currency-denominated external debt increase the likelihood of sudden stops. Foreign reserve assets play a mitigating role, although with diminishing returns, and the combination of flow and stock imbalances amplifies external risks, especially during periods of heightened global risk aversion. The results are especially strong for emerging economies, where the impact of flow and stock imbalances and foreign currency mismatches are larger and more robust across specifications.
Keywords:
international investment positions; current account; foreign reserves; sudden stops with large output loss; external crises.; WP; debt liability; foreign currency; debt liabilities increase; liability position; debt assets
Cover IMF Working Papers
UnFEAR: Unsupervised Feature Extraction Clustering with an Application to Crisis Regimes Classification
Mr. Jorge A Chan-Lau
We introduce unFEAR, Unsupervised Feature Extraction Clustering, to identify economic crisis regimes. Given labeled crisis and non-crisis episodes and the corresponding features values, unFEAR uses unsupervised representation learning and a novel mode contrastive autoencoder to group episodes into time-invariant non-overlapping clusters, each of which could be identified with a different regime. The likelihood that a country may experience an econmic crisis could be set equal to its cluster crisis frequency. Moreover, unFEAR could serve as a first step towards developing cluster-specific crisis prediction models tailored to each crisis regime.
Keywords:
clustering; unsupervised feature extraction; autoencoder; deep learning; biased label problem; crisis prediction; WP; crisis frequency; crisis observation; crisis risk; crisis data points; machine learning; Early warning systems; Global
Cover Departmental Papers
Managing Systemic Banking Crises: New Lessons and Lessons Relearned
Ms. Marina Moretti
,
Mr. Marc C Dobler
, and
Mr. Alvaro Piris Chavarri
This paper updates the IMF’s work on general principles, strategies, and techniques from an operational perspective in preparing for and managing systemic banking crises in light of the experiences and challenges faced during and since the global financial crisis. It summarizes IMF advice concerning these areas from staff of the IMF Monetary and Capital Markets Department (MCM), drawing on Executive Board Papers, IMF staff publications, and country documents (including program documents and technical assistance reports). Unless stated otherwise, the guidance is generally applicable across the IMF membership.
Keywords:
DPPP; DP; balance sheet; financial crisis; bridge bank; insurance fund; economic activity; public funds; bank; authority; process; bank liquidity; beneficial owner; due diligence; banking system; equity capital; targeted bank diagnostic; financial activity; cash flow; home resolution authority; bank risk; cash limit; Bank resolution framework; Global financial crisis of 2008-2009; Deposit insurance; Crisis management; Global; Europe
Cover IMF Working Papers
Credit Growth and Economic Recovery in Europe After the Global Financial Crisis
Sergei Antoshin
,
Mr. Marco Arena
,
Nikolay Gueorguiev
,
Mr. Tonny Lybek
,
Mr. John Ralyea
, and
Mr. Etienne B Yehoue
This paper reviews the empirical relationships between credit growth, economic recovery, and bank profitability in Europe after the global financial crisis (GFC). We find that the post-GFC recoveries in Europe have been weaker than previous recoveries, with the “double-dip” recessions in 2011–12 in many countries and the worldwide reach of the GFC explaining the underperformance. Bank lending has been subdued as well, but this appears to have only held back the recovery relatively moderately. A 10 percent increase in bank credit to the private sector is associated with a rise of 0.6–1 percent in real GDP and 2–2½ percent in real private investment. These relationships have not changed significantly during and after the GFC. Loan quality, customer deposits, bank equity price index, and bank capital appear to be closely linked to bank lending. As expected, bank profitability is positively and significantly influenced by credit growth, but this relationship has weakened after the GFC.
Keywords:
WP; credit growth; economic activity; private sector; price index; economic recovery; creditless recoveries; bank profitability; global financial crisis; Europe; dummy recession; recovery dummy; CESEE recession-recovery pattern; GFC-induced recession; recovery period; GFC recovery; credit dynamics; creditless recovery; GFC recession; credit extension; Credit; Bank credit; Global financial crisis of 2008-2009; Credit booms; Global
Cover IMF Working Papers
Fiscal Crises
Mrs. Kerstin Gerling
,
Mr. Paulo A Medas
,
Mr. Tigran Poghosyan
,
Juan Farah-Yacoub
, and
Yizhi Xu
A key objective of fiscal policy is to maintain the sustainability of public finances and avoid crises. Remarkably, there is very limited analysis on fiscal crises. This paper presents a new database of fiscal crises covering different country groups, including low-income developing countries (LIDCs) that have been mostly ignored in the past. Countries faced on average two crises since 1970, with the highest frequency in LIDCs and lowest in advanced economies. The data sheds some light on policies and economic dynamics around crises. LIDCs, which are usually seen as more vulnerable to shocks, appear to suffer the least in crisis periods. Surprisingly, advanced economies face greater turbulence (growth declines sharply in the first two years of the crisis), with half of them experiencing economic contractions. Fiscal policy is usually procyclical as countries curtail expenditure growth when economic activity weakens. We also find that the decline in economic growth is magnified if accompanied by a financial crisis.
Keywords:
WP; fiscal crisis; crisis episode; banking crisis dummy; real GDP; sovereign debt default; economic growth; twin crises; public debt debt ratio; crisis run-up; crisis onset; Debt default; Fiscal consolidation; Credit; Global
Cover IMF Working Papers
Crisis Transmission in the Global Banking Network
Galina Hale
,
Mr. Tümer Kapan
, and
Ms. Camelia Minoiu
We study the transmission of financial sector shocks across borders through international bank connections. For this purpose, we use data on long-term interbank loans among more than 6,000 banks during 1997-2012 to construct a yearly global network of interbank exposures. We estimate the effect of direct (first-degree) and indirect (second-degree) exposures to countries experiencing systemic banking crises on bank profitability and loan supply. We find that direct exposures to crisis countries squeeze banks' profit margins, thereby reducing their returns. Indirect exposures to crisis countries enhance this effect, while indirect exposures to non-crisis countries mitigate it. Furthermore, crisis exposures have real effects in that they reduce banks' supply of domestic and cross-border loans. Our results, based on a large global sample, support the notion that interconnected financial systems facilitate shock transmission.
Keywords:
WP; syndicated loan; commercial bank; balance sheet; return on assets; shock transmission; long-term interbank exposures; systemic banking crises; financial networks; syndicated loans; crisis exposure; bank type; bank performance; bank level; Loans; Foreign currency exposure; Banking crises; Systemic crises; Global
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Crisis Management, Bank Resolution, and Financial Sector Safety Nets
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note reviews crisis management, bank resolution, and financial sector safety nets in Norway. Arrangements for crisis management, bank and group resolution, and the financial sector safety nets are well developed and tested in Norway. Roles, responsibilities, accountabilities, and information-sharing arrangements among the relevant bodies are generally well defined and functioning. The current legal framework provides substantial powers and flexibility to deal with failing or failed banks but needs to be strengthened in several respects. The Financial Supervisory Authority has begun to implement a recovery plan requirement for the largest banks. The authorities also make good use of simulation exercises to enhance crisis preparedness.
Keywords:
ISCR; CR; MREL requirements; articles of association; banks assets; concern resolution; guarantee funds; problem bank; solvency support; lead resolution authority; MREL requirement; size bank; FSA responsibility; FSA comment; banking group; saving bank; Bank resolution framework; Financial stability assessment; Bank resolution; Financial sector stability; Global