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Europe > Norway

You are looking at 1 - 10 of 22 items for :

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Cover IMF Working Papers
Micro-Assessment of Macroprudential Borrower-Based Measures in Lithuania
Mantas Dirma
and
Jaunius Karmelavičius
Despite having introduced borrower-based measures (BBM), Lithuania's housing and mortgage markets were booming during the low-interest-rate period, casting doubt on the macroprudential toolkit's ability to contain excessive mortgage growth. This paper assesses the adequacy of BBMs’ parametrization in Lithuania. We do so by building a novel lifetime expected credit loss framework that is founded on actual loan-level default and household income data. We show that the BBM package effectively contains mortgage credit risk and that housing loans are more resilient to stress than in the preregulatory era. Our BBM limit calibration exercise reveals that (1) in the low-rate environment, income-based measures could have been tighter; and (2) borrowers taking out secondary mortgages rightly are and should be required to pledge a higher down payment.
Keywords:
macroprudential policy; borrower-based measures; LTV; mortgage credit risk; lifetime expected loss; probability of default.; calibration exercise; BBM package; modeling mortgage risk; Lithuania's housing market; Mortgages; Loans; Credit risk; Housing prices; Macroprudential policy instruments; Europe; Baltics; Global
Cover IMF Working Papers
Usability of Bank Capital Buffers: The Role of Market Expectations
José Abad
Following the COVID shock, supervisors encouraged banks to use capital buffers to support the recovery. However, banks have been reluctant to do so. Provided the market expects a bank to rebuild its buffers, any draw-down will open up a capital shortfall that will weigh on its share price. Therefore, a bank will only decide to use its buffers if the value creation from a larger loan book offsets the costs associated with a capital shortfall. Using market expectations, we calibrate a framework for assessing the usability of buffers. Our results suggest that the cases in which the use of buffers make economic sense are rare in practice.
Keywords:
Capital Buffers; Basel III; Capital Regulation; Financial Institutions; Macropru; valuation model; buffer Usability; market expectation; bank Capital Structure; capital shortfall; Countercyclical capital buffers; Correspondent banking; Loans; Market capitalization; COVID-19; Global
Cover IMF Working Papers
Revisiting the Monetary Transmission Mechanism Through an Industry-Level Differential Approach
Sangyup Choi
,
Tim Willems
, and
Seung Yong Yoo
We combine industry-level data on output and prices with monetary policy shock estimates for 105 countries to analyze how the effects of monetary policy vary with industry characteristics. Next to being interesting in their own right, our findings are informative on the importance of various transmission mechanisms (as they are thought to vary systematically with the included characteristics). Results suggest that monetary contractions reduce output by more in industries featuring assets that are more difficult to collateralize, consistent with the credit channel, followed by industries producing durables, as predicted by the interest rate channel. The credit channel is stronger during bad times as well as in countries with lower levels of financial development, in line with financial accelerator logic. We do not find support for the cost channel of monetary policy, nor for a channel running via exports. Our database (containing estimated monetary policy shocks for over 170 countries) may be of independent interest to researchers.
Keywords:
Monetary policy transmission; Industry growth; Financial frictions; Asymmetry in transmissions; balance sheet channel; channel of monetary policy; differential approach; IMF working papers; monetary policy stance; Financial statements; Central bank policy rate; Exchange rates; Monetary tightening; Export fluctuations; Global; credit channel; monetary policy shock; effects of monetary policy; x MPS; shock series; Credit; Financial sector development
Cover Regional Economic Outlook, October 2020, Europe
Regional Economic Outlook, October 2020, Europe
Whatever It Takes: Europe’s Response to COVID-19
International Monetary Fund. European Dept.

Abstract

The COVID-19 pandemic has caused dramatic loss of human life and major damage to the European economy, but thanks to an exceptionally strong policy response, potentially devastating outcomes have been avoided.

Keywords:
lockdowns; pandemic; corporate liquidity; recovery; reopening; economic outlook; forecasting; REO; policy support; infection curve; job retention program; Europe transform; financial market disruption; pandemic economy; solvency risks in Europe; time trend; reopening indices; infection incidence; reinfection risk; infection rate; credit access; containment policy; COVID-19; Liquidity; Solvency; Infrastructure; Europe; Global
Cover IMF Staff Country Reports
Norway: Financial Sector Assessment Program-Technical Note-Systemic Risk Oversight and Macroprudential Policy Framework
International Monetary Fund. Monetary and Capital Markets Department
While Norway’s institutional arrangement for macroprudential policy is uncommon, the authorities have shown strong willingness to act. The Ministry of Finance (MoF) is the sole macroprudential decision-maker in Norway, which is rare in international comparison. However, Norges Bank and the Finanstilsynet (FSA) play important advisory roles. In recent years, the authorities have taken substantive and wide-ranging macroprudential policy actions in response to growing systemic vulnerabilities—and these seem to have been effective in slowing down some of the riskier trends. The macroprudential policy toolkit is well stocked and actively used.
Keywords:
ISCR; CR; CRE sector; CRE market; CRE company; CRE risk; FSA survey; liquid asset; central bank; foreign currency; mortgage loan; financial system; Macroprudential policy; Financial stability assessment; Macroprudential policy instruments; Financial sector stability; Countercyclical capital buffers; Global; Mortgages
Cover IMF Research Perspectives
IMF Research Perspectives: Spring-Summer 2020
IMF Research Perspectives Spring-Summer 2020
Keywords:
IRB; worker; view IMF research; MARTINEZ PERIA interview
Cover Regional Economic Outlook, October 2018, Europe
Regional Economic Outlook, October 2018, Europe
Domestic Expansion Running into External Turbulence
International Monetary Fund. European Dept.

Abstract

Economic activity continued to expand in the first half of 2018, albeit at a slower-than-expected pace, mainly in advanced Europe. Domestic demand, supported by stronger employment and wages, remains the main engine of growth. However, the external environment has become less supportive and is expected to soften further in 2019 owing to slowing global demand, trade tensions, and higher energy prices. Tighter financial conditions in vulnerable emerging market economies and maturing business cycles are also weighing on activity. Accordingly, growth is projected to moderate from 2.8 percent in 2017 to 2.3 percent in 2018 and 1.9 percent in 2019. That said, it is expected to remain above potential in most countries in the region.

Keywords:
REO; monetary policy priority; credit growth; inflation pressure; financial condition; house price increase; policy space; Housing prices; Mortgages; Consumer credit; Macroprudential policy instruments; Inflation; Europe; Global; IMF staff calculation; trade openness; LTV cap; EU funds; asset price overvaluation; Credit
Cover IMF Staff Country Reports
Republic of Lithuania: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes the fiscal challenges in Lithuania. Lithuania’s fiscal position has strengthened in recent years. However, medium term challenges are significant given the severe demographic pressures from population aging and net emigration. Lithuania’s net financial worth of the general government is relatively strong compared with other countries in the region although contingent liabilities from the pension system are sizable. The recent reform of the pension system will help make the system more fiscally sustainable. Upcoming reforms should be carefully designed, considering their trade-offs, to ensure social sustainability; reduce old-age poverty; and limit adverse impact on labor supply and informality.
Keywords:
ISCR; CR; Lithuania; expenditure; pensioner; household expenditure; spending gap; population structure; Pillar II; employment income; households of pensioner; retirement age; loan-deposit ratio; consumption expenditure; case of Lithuania; Macroprudential policy; Pension spending; Fiscal rules; Pensions; Global; Europe
Cover IMF Staff Country Reports
Finland: Financial sector Assessment Program: Technical Note-Macroprudential Policy Framework
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses the findings and recommendations made in the Financial Sector Assessment Program for Finland in the area of macroprudential policy framework. The Finnish authorities regularly coordinate and collaborate with international bodies on macroprudential policy. Several macroprudential instruments were formally introduced in the legislation and activated recently. The 2014 Act on Credit Institutions implements macroprudential instruments, including those set out in the European Capital Requirement Directive. Despite the important progress made, there are some improvements that should be considered. The macroprudential policy toolkit should be expanded. The systemic risk buffer should be added to the toolkit, although its activation and level may still need further analysis.
Keywords:
ISCR; CR; FIN-FSA director general; FIN-FSA decision-making power; FIN-FSA's Board; banking sector; FIN-FSA's expertise; FIN-FSA's mandate; Macroprudential policy; Systemic risk; Macroprudential policy instruments; Systemic risk assessment; Loans; Baltics
Cover IMF Staff Country Reports
Norway: Selected Issues
International Monetary Fund. European Dept.
This paper discusses the oil economy, outlook, and risk for Norway. Growth has continued to slow in the mainland economy. At the start of this year, oil prices had dropped by roughly 60 percent from their peak in June 2014 to less than US$40 a barrel. The labor market is feeling the sting of the oil price crash. The krone has weakened substantially along with the decline in oil prices. However, a modest recovery should take root next year. Mainland economy growth should be about 1 percent this year and pick up to close to 1¾ percent in 2017.
Keywords:
ISCR; CR; mortgage; firm; risk; firm TFP; oil price; mortgage risk weight; development enterprise; labor market; LTV ratio guideline; tax deductibility; valuation gap; firm productivity; Housing prices; Mortgages; Productivity; Macroprudential policy instruments; Oil; Global; Western Europe