Macroprudential Policies for a Resource Rich Economy The Case of Mongolia

Author/Editor: Rodolfo Maino ; Patrick A. Imam ; Yasuhisa Ojima
Publication Date: January 22, 2013
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper explores the extent to which macroprudential tools can be used to manage banking sector risks in Mongolia, a commodity producing country exposed to both procyclical and cross-sectional financial sector risks. Loose fiscal policy, rising credit activity, and heightened risk appetite—attributable to the commodity boom—are fuelling price volatility in asset markets, posing significant risks to financial stability if left unchecked. Rising interconnectedness, potential increase in dollarization and concentrated exposures are compounding those risks. Macroprudential tools can complement fiscal and monetary policy adjustments to avoid the buildup of vulnerabilities in the banking sector.
Series: Working Paper No. 13/18
Subject(s): Macroprudential Policy | Mongolia | Natural resources | Banking sector | Fiscal policy | Credit expansion | Credit risk | Monetary policy

Publication Date: January 22, 2013
ISBN/ISSN: 9781475594881/1018-5941 Format: Paper
Stock No: WPIEA2013018 Pages: 47
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