Author: Darryl King
Publisher: International Monetary Fund
ISBN: 148430585X
Category : Business & Economics
Languages : en
Pages : 50
Get Book
Book Description
This paper considers the central bank mandate with respect to financial stability and identifies the links to the functioning of securities markets. It argues that while emergency support to securities markets is an important part of the crisis management response, a high bar should be set for its use. Importantly, it should be used only as part of a comprehensive policy package. The paper considers what types of securities markets may be important for financial stability, what market conditions could trigger emergency support measures, and how programs can be designed to restore market functioning while minimizing moral hazard.
Author: Mr. Kelly Eckhold
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 77
Get Book
Book Description
This paper examines emerging market and developing economy (EMDE) central bank interventions to maintain financial stability during the COVID-19 pandemic. Through empirical analysis and case study reviews, it identifies lessons for designing future programs to address challenges faced in EMDEs, including less-developed financial markets and lower levels of institutional credibility. The focus is on the functioning of the financial markets that are key to maintaining financial stability—money, securities, and FX funding markets. Several lessons emerge, including: (i) objectives should be well-specified and communicated to facilitate eventual exit; (ii) intervention triggers should prioritize liquidity metrics over prices; (iii) actions should be sufficiently large to address market dysfunction; (iv) the risks of fiscal dominance and moral hazard should be minimized; and (v) program design should incentivize self-liquidation by appropriate pricing or through short-term operations that quickly liquidate. While interventions may increase risks to central bank balance sheets, potentially challenging policy solvency and operational independence, a well-designed framework can significantly mitigate these risks.
Author: Mr.Garry J. Schinasi
Publisher: International Monetary Fund
ISBN: 1451854404
Category : Business & Economics
Languages : en
Pages : 19
Get Book
Book Description
What is the role of central banks in ensuring financial stability? This paper addresses this controversial subject, in part by drawing on the experiences in Europe, Japan, and the United States, and by examining four questions. What is meant by financial stability? Do central banks have a natural role in ensuring financial stability? What does a central bank need to execute this role effectively? How far have central banks actually gone in safeguarding financial stability? The experience drawn on in the paper suggest that central banks: have a natural role to play; at times may require supervisory information to execute this natural role; and have incurred risks to their balance sheets to ensure financial stability.
Author: Mr.Marc Quintyn
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 66
Get Book
Book Description
In an indirect monetary policy framework, open market operations become the central bank’s main instrument. In the initial stages, when financial markets are still undeveloped, selection of a financial instrument for those operations and the design of supporting arrangements to ensure the central bank’s operational autonomy when using the instrument, are crucial issues. Based on theoretical arguments and experience of a sample of countries that embarked on financial reforms, this paper argues that government securities are the preferred instrument because of their better capacity to develop financial markets. The use of government securities, however, requires the most complex supporting arrangements.
Author: Board of Governors of the Federal Reserve System
Publisher:
ISBN: 9780894991967
Category : Banks and Banking
Languages : en
Pages : 0
Get Book
Book Description
Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.
Author: Marc Dobler
Publisher: International Monetary Fund
ISBN: 1498355994
Category : Business & Economics
Languages : en
Pages : 63
Get Book
Book Description
The global financial crisis (GFC) has renewed interest in emergency liquidity support (sometimes referred to as “Lender of Last Resort”) provided by central banks to financial institutions and challenged the traditional way of conducting these operations. Despite a vast literature on the topic, central bank approaches and practices vary considerably. In this paper we focus on, for the most part, the provision of idiosyncratic support, approaching it from an operational perspective; highlighting different approaches adopted by central banks; and also identifying some of the issues that arose during the GFC.
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 1484369491
Category : Business & Economics
Languages : en
Pages : 44
Get Book
Book Description
The flexibility shown by the ECB/Eurosystem in adapting its framework, as required by circumstances, has helped improve funding and liquidity conditions. Compared to the situation pre-crisis, the ECB/Eurosystem has provided liquidity against a broader range of collateral and for as long as four years in terms of maturity; extended liquidity in foreign currency; conducted outright purchases of public and private sector assets (now tapering off); and reduced interest rates into negative territory. In these arrangements, policy is directed from the center, but is implemented mostly by the National Central Banks (NCBs); risks are largely shared. Market participants are complimentary about the role the ECB/Eurosystem has played in backstopping the financial system and its forward guidance on monetary policy.
Author: Froukelien Wendt
Publisher: International Monetary Fund
ISBN: 1498322050
Category : Business & Economics
Languages : en
Pages : 25
Get Book
Book Description
Central counterparties (CCPs) can offer significant benefits to a market. However, CCPs are also highly interconnected with financial institutions and markets and therefore too important to fail. The increased volumes cleared through CCPs and their increasing global scope, in particular in the OTC derivatives market, make it even more important that systemic risks related to CCPs are managed. This paper argues that the current set of international policy measures does partly address these risks, but that alternative policy measures are needed to reduce remaining systemic risks. For example, the paper recommends network analysis to be conducted by CCPs and authorities to gauge potential losses and suggests a common international approach to central bank services to help reduce the dependency of CCPs on services provided by commercial banks.
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 1513500465
Category : Business & Economics
Languages : en
Pages : 19
Get Book
Book Description
This Technical Note discusses key findings of the assessment of Banking Resolution, and Crisis Prevention and Management Frameworks for Samoa. It is recommended that the current regulatory framework to deal with financial institutions (FIs) should be reformed. The Central Bank of Samoa (CBS) has issued “Prudential Statements" containing some prudential rules, ratios, and limits applicable to FIs, but there are no general standards for their enforcement, which is done on a purely discretional case-by-case basis. The powers from the Central Bank Act are not strong enough to enable the CBS to take enforcement actions. A fully amended legal and regulatory banking resolution framework is needed for the CBS to be able to deal effectively with serious banking problems.
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 63
Get Book
Book Description
The IMF conducted a diagnostic review of the financial system of the Kingdom of Eswatini and proposed a Technical Assistance Roadmap to support the authorities’ detection of risks and vulnerabilities and to enhance capacity in financial sector oversight. The financial stability module focused on areas agreed with the country authorities: financial stability and systemic risk monitoring, macroprudential frameworks and tools; crisis management and financial safety net; and supervision and regulation of banks, nonbank deposit-taking institutions, insurance, and retirement funds. The financial sector statistics module focused on key gaps in monetary and financial statistics and financial soundness indicators that hamper financial stability analysis.
