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Wednesday, 17 April 2013

Global Financial Stability Report 2013 - International Monetary Fund

World Economic and Financial Surveys :

Global Financial Stability Report "Old Risks, New Challenges"

The April 2013: The Global Financial Stability Report examines current risks facing the global financial system and policy actions that may mitigate these. The April 2013 report analyzes the key challenges facing financial and nonfinancial firms as they continue to repair their balance sheets and unwind public and private debt overhangs. 

Chapter 1 also examines short- and medium-term stability risks in the euro area and the vulnerability of emerging market economies to persistent capital inflows. 

Chapter 2 takes a closer look at whether sovereign credit default swaps markets are good indicators of sovereign credit risk. 

Chapter 3 reports on unconventional monetary policy in some depth, including the policies pursued by the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank, and the U.S. Federal Reserve. 

 Contents & Front Matter :

Chapter 2. A New Look at the Role of Sovereign Credit Default Swaps 

Examines whether sovereign credit default swaps (SCDS) are good market indicators of sovereign credit risk, and finds that many of the negative perceptions surrounding their impact on financial stability are unfounded: SCDS markets do not appear to be more prone to high volatility than other financial markets. The results of the analysis do not support the need for a ban on “naked” SCDS protection buying, which went into effect in the European Union in November 2012.

Investigates the monetary policies pursued by four central banks (the Federal Reserve, Bank of England, European Central Bank, and Bank of Japan), including prolonged periods of low real policy interest rates and unconventional measures, including asset purchases. The policies appear to have lessened banking sector vulnerabilities and contributed to financial stability in the short term. However, policymakers should be alert to the possibility that risks may rise the longer these policies are maintained. Though not failsafe, targeted micro- and macroprudential tools should be used to mitigate risks while allowing greater leeway for monetary policy to support the macroeconomy. 
Statistical Appendix : Statistical Appendix : Full Text

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