Summary of Proceedings

Financial Risks, Stability, and Globalization   Financial Risks, Stability, and Globalization

Papers presented at the IMF's eighth Central Banking Seminar held in Washington, D.C.—June 5–8, 2000

Editor: Omotunde E.G. Johnson

©2002 International Monetary Fund
April 29, 2002

Ordering Information

  Horst Köhler
  Stefan Ingves
  Omotunde E.G. Johnson
I. Introduction

  1. Financial Risks, Stability, and Globalization: Overview of Issues and Papers
    Omotunde E.G. Johnson

  2. Opening Remarks: The IMF and the Financial Sector
    Stanley Fischer
II. Risk Management and Governance in Financial Institutions

  1. On Internal Ratings, Models, and the Basel Accord: Issues for Financial Institutions and Regulators in Measuring and Managing Credit Risk
    David Stephen and Michael Fischer

    Paolo Marullo Reedtz
    Huw Evans

  2. Calculating Counterparty Credit Exposure When Credit Quality Is Correlated with Market Prices
    W. Trevor Uhl and Charles R. Monet

    Liliana Schumacher
    Jeffrey A. Brown

  3. Alternative Approaches to Regulation and Corporate Governance in Financial Firms
    David T. Llewellyn

    Klaas H.W. Knot
    David Marston

  4. Insurance in the Development of Financial Services: Policy Implications and Issues for a Research Program
    Orio Giarini
III. Financial Crises and Contagion

  1. On the Welfare Costs of Systemic Risk, Financial Instability, and Financial Crises
    Koichi Hamada

    Heikki Koskenkylä
    Omotunde E.G. Johnson

  2. Assessing the Ability of a Financial System to Withstand Financial Stress: A Market Perspective
    Christopher T. Mahoney

    Lex Rieffel
    Charles Enoch
IV. Domestic Monetary and Financial Policies

  1. Safety-First Monetary and Financial Policies for
    Emerging Economies
    Andrew Powell

  2. The Central Bank's Role in Fostering Financial
    System Stability: A Canadian Perspective
    Malcolm Knight

  3. Dynamic Inconsistency of Capital Forbearance: Long-Run Versus Short-Run Effects of Too-Big-to-Fail Policymaking
    Edward J. Kane

    Andi Kloefer
    Tomás J.T. Baliño

  4. Fiscal Support in Financial Sector Restructuring:
    Analytical Issues
    Timo Välilä

    Jong-Koo Lee

  5. Changes in Bank Behavior During Japan's Financial Crisis
    Hiroshi Nakaso and Morichika Hattori

    Ceyla Pazarbaşıoğlu
    Barbara Baldwin

  6. International Capital Mobility and Domestic Financial System Stability: A Survey of Issues
    V. Sundararajan, Akira Ariyoshi, and İnci Ötker-Robe

    Felipe Morandé
    Latifah Merican Cheong
V. International Cooperation

  1. International Cooperation for Financial System Stability
    Ydahlia Metzgen, Marco Rossi, and Przemyslaw Gajdeczka

    Eduardo Fernandez-Arias
    Gerald Grisse

  2. On International Cooperation and Standards and Codes
    André Icard

  3. The Changing Role of the IMF and the World Bank in Assessing and Promoting Financial System Soundness
    Carl-Johan Lindgren

  4. Assessing Financial Sector Soundness: The Role of the IMF
    Stefan Ingves, Alfredo M. Leone, Paul Hilbers,
    and Mark O'Brien

    Richard Freeman
    Youssef El-Khalil

List of Participants


This book contains the proceedings of the IMF's eighth Central Banking Seminar, which was held June 5–8, 2000, and organized by the IMF's Monetary and Exchange Affairs Department in collaboration with the IMF Institute. Since they began in 1983, these seminars have been organized every two to three years; the seventh in the series took place in January 1997. The seminars have provided a useful forum for wide-ranging discussions on a number of central banking issues among senior practitioners from the IMF membership. The objective has not necessarily been to reach definitive conclusions or to arrive at a consensus on any issue. The topics chosen feature prominently in current debates in the monetary, banking, and exchange areas. The seminars also are an opportunity to inform relevant and interested parties about the IMF's current analytical and policy work in the areas concerned.

This volume takes its title from the theme of the eighth seminar, "Financial Risks, Stability, and Globalization." Apart from staffs of the IMF and the World Bank, participants were drawn from the Bank for International Settlements, the Inter-American Development Bank, private financial firms, academia, regulatory and supervisory agencies, and central banks. Officials from over 35 countries were represented. The diversity of the specialties and backgrounds of the main speakers and the commentators demonstrates the complexity of the topics discussed. As expected, the diversity contributed strongly to the depth of the discussions.

The topics themselves are of immense concern to the IMF, in general, and its Monetary and Exchange Affairs Department in particular. Indeed many of the issues raised feature prominently in the IMF's Article IV consultations and technical assistance. But the topics also reflect the growing amount of time and energy that policymakers, including central bankers, in all parts of the world have had to devote in recent years to safety, efficiency, and stability of the financial system. Macroeconomic policymakers particularly seek to understand the major factors determining risk management, efficiency, and stability in financial systems; the economic costs of suboptimal levels of risk management, efficiency, and stability; and the nature of optimal policy interventions. In this context, the IMF in its relations with countries has been paying great attention to banking and financial sector issues, such as bank soundness, systemic bank restructuring, and the safety and efficiency of systemically important payment systems, and their interaction with the macroeconomic environment. It has been the intention in organizing this seminar to reflect some of this ongoing work of the IMF and to obtain the views of other experts on these issues. We hope that the volume will be of value to policymakers as well as researchers.


Stefan Ingves

Monetary and Exchange Affairs Department
International Monetary Fund