Twenty years ago, the IMF released its first Global Financial Stability Report to strengthen its monetary watchdogs for crypto in the wake of a series of emerging financial problems and a dot-com bust. The IMF has raised his commitment “the trans-formation of earthquakes in the global economy and the financial situation into one of our most important monitoring tools”. In line with World Economic Outlook and Fiscal Monitor, this leading report aims to promote international financial and financial stability. Monitoring the health and vision of the global economy and member states is central to the Fund’s mission. This oversight role, mentioned in the amendments to our Articles of Agreement first adopted at the Bretton Woods Conference of 1944, places the responsibility on overseeing and protecting the international financial system.monitor crypto global financial markets.
In the early years, oversight focused on macroeconomic processes and exchange rate of member states, but the growth of international banks in the early 1970s highlighted the need to better monitor crypto global financial markets and assess the implications for financial stability. As a result, the Fund initiated discussions with financial authorities at major financial institutions and in 1974 initiated internal reports on market developments and prospects, and we analyzed a crisis such as the Latin American debt crisis in the 1980’s or the European exchange rate problem in the early 1990’s. But the rapid growth of that era and the consolidation of global financial markets, as well as the subsequent financial problems in Asia and a few other emerging markets, highlighted the need to better assess system risk.
The launch of the Global Financial Stability Report has identified an important step towards a comprehensive and general assessment of cross-border cash flows and financial market risks. During his stint at the first GFSR, then Executive Director Horst Köhler noted how the report had its origins in the crisis. of global economic growth, but sometimes at the root of many problems, ”he wrote. “The opportunities offered by global financial markets to promote global prosperity must be measured in terms of commitment to prevent deteriorating financial problems.”
The GFSR has since focused on identifying circulatory and structural deficiencies in the banking and non-banking sectors of developed and emerging economies, significant risks, and policy options to mitigate these risks. It is easy and the desire for investor risk is strong. And in such times, our stability reports place great emphasis on the potential threats we see building. One of the most important GFSR moments came in 2007, when the impact of the US housing collapse shook the economy and global markets. In a tightly integrated world, the global financial crisis emphasized the importance of better dotting links between institutions, sectors and countries.
Implementation of the framework
Since then, the Fund has expanded its efforts to analyze and understand system risk communication, cross-border communication and bloodshed, and the role of prudent policies in strengthening financial system resilience assessing and monitoring financial risk risks. It focuses on risks that exacerbate negative shocks, triggering a negative response between declining commodity prices and strengthening financial conditions, support for financial firms, and weakening economic activity. The implementation of the framework frame-work depends on two tools: a comprehensive set of key risks indicators of financial and real sectors (such as debt repayment and liquid asset and short-term liabilities) that can serve as intermediate objectives for highly prudent policies (such as capital buffers and repayment rates); and an integrated measure of how the risks of financial stability can affect the expected global economic activity, which we call “risky growth.”
These tools complement each other for monitoring and policy purposes, as a thorough analysis of specific exposures provides the variability and depth required for a concise measure of threats to economic growth. The GFSR also called for the reform of the international regulatory environment to address the gaps posed by the global financial crisis. In addition, it has supported the strengthening of oversight of non-bank financial institutions, which play a key role in solving this problem and which can make the program more vulnerable.
While we have made progress, the ongoing change in global financial markets – not least because of the confusing pace of technological innovation – is constantly introducing new weaknesses and risks that require constant vigilance. For example, the emergence of faster and more complex computer technologies has facilitated the growth of high-quality business, which can improve market efficiency but can also be a source of market instability markets with fintech and crypto assets that carry opportunities but also significant risks the GFSR poses. Climate change poses another threat to the stability we have been analyzing, as well as the potential role of sustainable investment and the private sector in promoting green change.
And now, as our recent reports have highlighted, the ongoing epidemic and war in Ukraine have further strengthened financial risk by increasing pre-existing weaknesses, contributing to severe inflation for decades, and dealing with international financial markets at great risk of fragmentation than ever before, rapid technological change and the general and various shocks make our surveillance very important in safeguarding global financial and financial stability in order to promote growth and inclusion. And it is becoming increasingly clear that, in doing so, we must keep abreast of and sharpen our risk assessment tools in order to better scale the global financial situation and strengthen its resilience.
For more read: https://blogs.imf.org/2022/06/22/from-1980s-debt-crisis-to-crypto-era-financial-stability-monitoring-is-always-evolving/
