Global ETF News Older than One Year
IMF Working paper-Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten
December 24, 2013--Summary: Even after one of the most severe multi-year crises on record in the advanced economies, the received wisdom in policy circles clings to the notion that high-income countries are completely different from their emerging market counterparts.
The current phase of the official policy approach is predicated on the assumption that debt sustainability can be achieved through a mix of austerity, forbearance and growth. The claim is that advanced countries do not need to resort to the standard toolkit of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression. As we document, this claim is at odds with the historical track record of most advanced economies, where debt restructuring or conversions, financial Repression, and a tolerance for higher inflation, or a combination of these were an integral part of the resolution of significant past debt overhangs.
Source: IMF
IMF Working paper-Does Financial Connectedness Predict Crises?
December 24, 2013--Summary: The global financial crisis has reignited interest in models of crisis prediction. It has also raised the question whether financial connectedness- a possible source of systemic risk- can serve as an early warning indicator of crises.
In this paper we examine the ability of connectedness in the global network of financial linkages to predict systemic banking crises. Our results indicate that increases in a country's financial interconnectedness and decreases in its neighbors' connectedness are associated with a higher probability of banking crises after controlling for macroeconomic fundamentals.
Source: IMF
Low emerging markets returns have investors wary
December 23, 2013--Just when pension funds across the globe were getting comfortable with the idea of investing in emerging markets, their faith is being tested by disappointing performance.
The question is where performance in emerging markets-and institutional investments -go from here. Experts have different answers.
Source: Pensions & Investments
ASIC helps develop IOSCO report on the regulation of retail structured products
December 23, 2013--The International Organization of Securities Commissions (IOSCO) today published a final report on Regulation of retail structured products, which provides a toolkit outlining regulatory options that securities regulators globally may find useful to regulate retail structured products.
ASIC Chairman Greg Medcraft and staff co-led the development of the report, together with representatives from the French Autorité des Marchés Financiers.
Source: ASIC
IMF Working paper-The Benefits of International Policy Coordination Revisited
December 23, 2013--Summary: This paper uses two of the IMF's DSGE models to simulate the benefits of international fiscal and macroprudential policy coordination. The key argument is that these two policies are similar in that, unlike monetary policy, they have long-run effects on the level of GDP that need to be traded off with short-run effects on the volatility of GDP.
Furthermore, the short-run effects are potentially much larger than those of conventional monetary policy, especially in the presence of nonlinearities such as the zero interest rate floor, minimum capital adequacy regulations, and lending risk that depends in a convex fashion on loan-to-value ratios. As a consequence we find that coordinated fiscal and/or macroprudential policy measures can have much larger stimulus and spillover effects than what has traditionally been found in the literature on conventional monetary policy.
view the IMF Working paper-The Benefits of International Policy Coordination Revisited
Source: IMF
IMF Working Paper-Global Spillovers into Domestic Bond Markets in Emerging Market Economies
December 23, 2013--Summary: While fiscal conditions remain healthier than in advanced economies, emerging economies continue to be exposed to negative spillovers if global conditions were to become less favorable.
This paper finds that domestic bond yields in emerging economies are heavily influenced by two international factors: global risk appetite and global liquidity. Using a novel approach, the analysis goes on to show that the vulnerability of emerging economies to these factors is not uniform but rather depends on country specific characteristics, namely fiscal fundamentals, financial sector openness and the external current account balance.
view the IMF Working paper-Global Spillovers into Domestic Bond Markets in Emerging Market Economies
Source: IMF
DECPG Weekly Global Economic Brief
December 20, 2013--The US Federal Reserve announced that it will begin a gradual tapering of its asset purchase program beginning in
January 2014, initially reducing it from $85bn to $75bn per month. The communication around the policy change was effective, with most markets reacting calmly to the news.
Stock-markets and currencies in selected developing countries had already come under renewed pressure in recent weeks, but did not suffer additional adverse effects with the announcement. The recent WTO trade facilitation agreement reached in December has the potential to significantly ease the transactions cost of moving goods across borders, with significant benefits to developing countries
The US Federal Reserve decided this week to start gradually reducing its quantitative easing policies, reinforcing at the same time its commitment to maintaining short-term policy rates close to zero until at least mid-2015. The Fed decision reflects a convergence of factors including the decline in the US unemployment rate, improving housing markets and progress in fiscal negotiations in the US Congress. Markets reacted calmly to the news, taking comfort in the upbeat assessment of the outlook for the US economy and the reinforced commitment to keep short-term policy rates unchanged "well past the time that the unemployment rate declines below 6-1/2 percent", which by the Fed’s own forecasts will not happen until the end of 2015. Given the role the US Fed has come to play on US bond markets (holding at present more than 50 percent of the outstanding amount of Treasuries of 8 to 10 year maturity), market volatility and potentially abrupt changes in yields and risk premia may yet arise. The process of withdrawing quantitative easing is expected to span most of 2014.
Source: World Bank
IMF Working paper-Procyclicality and the Search for Early Warning Indicators
December 20, 2013--Summary: This paper compares three types of early warning indicators of financial instability-those based on financial market prices, those based on normalized measures of total credit and those based on liabilities of financial intermediaries. Prices perform well as concurrent indicators of market conditions but are not suitable as early warning indicators.
Total credit and liabilities convey similar information and perform better as early warning indicators, but liabilities are more transparent and the decomposition between core and non-core liabilities convey additional useful information.
view the IMF Working paper-Procyclicality and the Search for Early Warning Indicators
Source: IMF
IMF Working paper-External Imbalances and Financial Crises
December 20, 2013-- Summary: Consider two views of the global financial crisis, One view looks across the border: it blames external imbalances, the unprecedented current account deficits and surpluses in recent years, Another view looks within the border: it faults domestic financial systems where risks originated in excessive credit booms.
We can use the lens of macroeconomic and financial history to confront these dueling hypotheses with evidence. The credit boom explanation is the most plausible predictor of crises since the late nineteenth century; global imbalances have only a weak correlation with financial distress compared to indicators drawn from the financial system itself.
view the IMF Working paper-External Imbalances and Financial Crises
Source: IMF
IOSCO Publishes Report on Regulation of Retail Structured Products
December 20, 2013--IOSCO Publishes Report on Regulation of Retail Structured Products
The International Organization of Securities Commissions (IOSCO) today published the final report on Regulation of Retail Structured Products, which provides a toolkit outlining regulatory options that securities regulators may find useful to regulate retail structured products.
The Toolkit has been developed with the goal of enhancing investor protection by providing securities regulators with possible approaches to address certain concerns with retail structured products. The proposed tools are intended to allow for a wide range of application and adaptation in different jurisdictions, and regulators may choose to implement some, all, or none of them in their jurisdiction.
view the IOSCO report-Regulation of Retail Structured Products Final Report
Source: IOSCO
