White Papers
IMF Working Paper Elections Matter: Capital Flows and Political Cycles
November 19, 2025-Summary
How should central banks explore tokenized reserves? Central banks are increasingly exploring how to make their reserves available to selected banks using distributed ledger technology, referred to as tokenized reserves.
This chapter covers policy objectives for tokenized reserves, operating models and roles of central banks, implications for monetary policy implementation, alternative solutions, and implementation strategies. Ultimately, central banks’ strategic decisions and policy options will vary across jurisdictions, reflecting differences in available resources, legal systems, and policy priorities.
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Source: imf.org
IMF Working Paper Elections Matter: Capital Flows and Political Cycles
November 14, 2025-Summary
This paper contributes to the relatively limited literature on the impact of political uncertainty on international capital flows to emerging market economies. We incorporate elections as a proxy for political uncertainty into a standard push-pull framework for analyzing capital flows.
Using quarterly data for a panel of 38 emerging market economies from 1990 to 2020, we show that periods surrounding elections are associated with a decline in gross private capital inflows.
This adverse impact is larger and more persistent when uncertainty extends beyond the election period, for example in the context of uncertain policy priorities following incumbent’s loss. By contrast, higher levels of overall political stability appear to mitigate these adverse effects. We also find evidence that stronger institutions, as reflected in indicators such as regulatory quality and rule of law, help to mitigate the adverse effects of political uncertainty on capital flows. The results remain robust across a range of alternative specifications, including controls for standard economic drivers of capital flows, election characteristics, and model assumptions.
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Source: imf.org
Hidden in Plain Sight: Physical Risk in Asset Owners' Portfolios
November 3, 2025-Corporate asset locations are a critical source of financial-risk intelligence for investors. More so when coupled with powerful overlays related to physical climate risk.
MSCI's new study, conducted in collaboration with Swiss Re Risk Data Solutions, analyzed more than 11,000 companies and 500,000 physical assets underpinning the listed-equity portfolios of 18 leading asset owners, representing USD 4 trillion in AUM.
Key takeaways:
Potential business-interruption risk is 14 times larger than asset damage risk
55% of companies are severely exposed to physical risk hazards today
89% of assets face multiple overlapping hazards
Clear adaptation gap demands investor engagement, only 16% of those exposed firms formally disclose integration of physical risk management
Physical risk exposures are global, regardless of regional investment focus. Hazards such as wildfires, droughts and heat waves often compound and are already affecting portfolio companies worldwide.
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Source: msci.com
New ICI Paper Outlines Key Considerations for ETF Share Class
October 6, 2025-The Investment Company Institute (ICI) has published a new paper exploring the operational considerations for launching an ETF share class within an existing mutual fund portfolio. The expected SEC relief for funds with both ETF and mutual fund share classes provides an opportunity to broaden investor choice, promote efficiency and economies of scale, and enhance competition in the asset management sector.
The paper, ETF Share Class Operational Considerations, comes on the heels of the Securities and Exchange Commission's notice on September 29, 2025 that it intends to begin grant exemptive relief permitting dual share class funds shortly.
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Source: Investment Company Institute
Physical AI is changing manufacturing - here's what the era of intelligent robotics looks like
September 9, 2025-Physical AI is driving a new phase of industrial automation, offering a powerful solution to manufacturing challenges like rising costs, labour shortages,and shifting customer demands.
A new World Economic Forum white paper examines how breakthroughs in AI, sensors, and hardware are creating a new breed of smarter, more agile industrial robots.
Early adopters like Amazon and Foxconn are already seeing significant benefits, including improved efficiency, faster delivery times, and the creation of new skilled jobs.
Automation helped shape the First Industrial Revolution – and it continues to evolve in today's Fourth. While automation has long been part of the manufacturing landscape, recent advances in artificial intelligence, vision systems and robotics hardware are enabling a new generation of more intelligent and adaptable machines.
A new white paper from the World Economic Forum, Physical AI: Powering the New Age of Industrial Operations, explores how these developments are expanding the role of robotics - not just to boost efficiency, but to support greater flexibility and resilience on the factory floor.
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Source: World Economic Forum
Economic development, carbon emissions and climate policies
September 8, 2025-If economic activity is considered the primary driver of climate change through emissions of carbon dioxide, then supporting economic growth and fighting emissions would appear to be at odds. However, the process of economic development may itself foster complementarity between GDP growth and emissions reductions.
Such complementary in the relationship between economic development and emissions reduction might reflect changes in the industrial composition of economic activity, technological advancements or environmental consciousness.This view is in line with the Environmental Kuznets Curve (EKC) hypothesis: that per-capita income growth is associated with increases in carbon emissions up to a certain threshold of economic development, but beyond that threshold, higher per-capita incomes are associated with lower emissions per capita. The EKC hypothesis, suggests that economic development is actually a pathway to environmental improvements.
We test the EKC hypothesis for 191 countries over 1989-2022, enabling us to study the overall validity of the EKC hypothesis at global level.
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Source: bruegel.org
IMF Working Paper-Interest Rate Sensitivity Scenarios to Guide Monetary Policy
May 30, 2025--Summary
This paper examines the challenges of formulating monetary policy in the face of heightened uncertainty. We develop a framework to assess the optimal monetary policy path under uncertainty, focusing on four key dimensions: the expectation formation process, inflation persistence, the measurement of the neutral interest rate, and the slope of the Phillips curve.
Our framework provides a flexible tool for policymakers to address uncertainty and enhance decision-making in pursuit of economic stability. This framework is helpful to improve the risk management approach to monetary policy by showing how scenarios can quantify different sources of uncertainty faced by the ECB and give market participants an idea of how the ECB would react if those scenarios materialize.
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Source: IMF.org
IMF Working Paper-The Rise and Retreat of US Inflation: An Update
May 16, 2025--Summary
Why did US inflation rise over 2021-22 and why has it retreated since then? Ball, Leigh, and Mishra (2022), writing near the inflation peak, explained the rise with a framework in which inflation depends on three factors: long-term expectations; the tightness of the labor market as measured by the vacancy-to-unemployment (V/U) ratio; and large changes in relative prices in particular industries such as energy and autos.
This paper finds that the same framework explains the retreat in inflation since our earlier work.
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Source: IMF.org
IMF Working Paper-Growth, Interrupted: How Crises delay Global Convergence
June 13, 2025--Summary
During a major crisis, the transitional dynamics of conditional convergence are unlikely to apply. In this paper, we introduce a Markov chain approach which integrates the study of crises and convergence. We allow upwards and downwards mobility to change when a country enters a crisis regime. .
We find that conflict and debt crises help to explain the persistence of low relative income, and that the convergence process has changed over time. Faster global convergence in the early 2000s can be attributed partly to fewer and shorter crises, so the multiple shocks after 2020 are likely to have slowed income convergence.
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Source: IMF.org
IMF Working Paper-Lifting Binding Constraints on Growth in Europe: Actionable Priorities to Deepen the Single Market
June 13, 2025--Summary
Focusing on a cross-border perspective, this paper identifies four key binding constraints that hinder firms' ability to innovate and scale up within the EU single market-fragmented regulations, inefficient financial intermediation, limited labor mobility, and fragmented energy market.
To address these constraints and facilitate firms' cross border scale up, investment and innovation, the paper proposes key action areas for deepening the integration of the single market, including lowering regulatory fragmentation, advancing the capital markets union, enhancing labor mobility within the EU, and integrating the EU energy market.
Through illustrative scenarios, the paper highlights that a few actionable steps along these dimensions could lead off the process of deeper integration and deliver a meaningful initial payoff by increasing the EU GDP level relative to baseline by around 3 percent over 10 years-a sizable improvement considering that the EU potential growth is projected to be just above 1 percent annually over this horizon.
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Source: IMF.org
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