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Law > Business and Financial

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Cover Policy Papers
State-Contingent Debt Instruments for Sovereigns
International Monetary Fund
Background. The case for sovereign state-contingent debt instruments (SCDIs) as a countercyclical and risk-sharing tool has been around for some time and remains appealing; but take-up has been limited. Earlier staff work had advocated the use of growth-indexed bonds in emerging markets and contingent financial instruments in low-income countries. In light of recent renewed interest among academics, policymakers, and market participants—staff has analyzed the conceptual and practical issues SCDIs raise with a view to accelerate the development of self-sustaining markets in these instruments. The analysis has benefited from broad consultations with both private market participants and policymakers. The economic case for SCDIs. By linking debt service to a measure of the sovereign’s capacity to pay, SCDIs can increase fiscal space, and thus allow greater policy flexibility in bad times. They can also broaden the sovereign’s investor base, open opportunities for risk diversification for investors, and enhance the resilience of the international financial system. Should SCDI issuance rise to account for a large share of public debt, it could also significantly reduce the incidence and cost of sovereign debt crises. Some potential complications require mitigation: a high novelty and liquidity premium demanded by investors in the early stage of market development; adverse selection and moral hazard risks; undesirable pricing effects on conventional debt; pro-cyclical investor demand; migration of excessive risk to the private sector; and adverse political economy incentives.
Keywords:
PP; State-Contingent Debt instrument; investor; issuer; benchmark design; market development; real GDP; foreign currency; interest rate; debt service; Bonds; Sovereign bonds; Securities; Currencies; Global
Cover IMF Staff Country Reports
Republic of Poland: Review Under the Flexible Credit Line Arrangement-Press Release; Staff Report; and Statement by the Alternate Executive Director for the Republic of Poland
International Monetary Fund. European Dept.
This paper discusses Poland’s performance under the Flexible Credit Line Arrangement. In recent years, Poland’s macroeconomic policies have focused on further strengthening fundamentals and institutional frameworks. Fiscal consolidation has led to an exit from the Excessive Deficit Procedure. Monetary policy has been eased to help lift inflation. Financial sector supervision has been strengthened with a new macroprudential framework. Reserves are broadly adequate against standard metrics. The new government has pledged to maintain prudent policies, including gradual fiscal consolidation over the medium term, and to ensure the continued stability of the banking system. In the period ahead, it will be important to identify specific growth-friendly measures to underpin the fiscal adjustment and reduce implementation risk.
Keywords:
ISCR; CR; FCL arrangement; FCL resource; IMF's Executive Board; CA deficit; economy; policy buffer; Bond yields; Commercial banks; Global
Cover IMF Staff Country Reports
People’s Republic of China: Detailed Assessment Report-CPSS-IOSCO Recommendations for Securities Settlement Systems and Central Counterparties
International Monetary Fund
A detailed assessment report on the observance of the Committee on Payment and Settlement Systems-International Organization of Securities Commissions recommendations for China’s Securities Settlement Systems and Central Counterparties is presented. The bond market comprises the interbank bond market, the exchange bond market, and the bank counter market. The two stock exchanges, the Shanghai Stock Exchange and the Shenzhen Stock Exchange, have been established in 1990 and offer trading in the same type of securities, being shares, bonds, funds, and warrants.
Keywords:
ISCR; CR; bond market; futures trading; market participant; securities registration; cash settlement; securities law; margin requirement; bond trading; book entry; Securities; Securities markets; Securities regulation; Futures; Bonds; Global
Cover IMF Staff Country Reports
Ireland: Staff Report for the 2006 Article IV Consultation
International Monetary Fund
The 2006 Article IV Consultation found that the financial system in Ireland continues to perform well but rapid credit growth is a vulnerability. Central Bank officials noted that recent stress tests indicate that the major lenders have adequate buffers to cover a range of shocks. The Financial Regulator observed that the risk weighting on high loan-to-value mortgages was increased, consistent with the advice of the Financial Sector Assessment Program (FSAP) Update mission. The general government fiscal position has been either close to balance or in surplus for the past decade.
Keywords:
ISCR; CR; debt; asset; Ireland; HICP inflation; widening current account deficit; real GNP growth; household debt; asset ratio; potential GDP; business income; return on equity; Credit; Mortgages; Wages; Europe; Global