Macroprudential Policies for a Resource Rich Economy The Case of Mongolia
IMF Working Papers, January 22, 2013
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Bibliographic details
- Authors: Rodolfo Maino, Patrick A. Imam, Yasuhisa Ojima
- Published: January 22, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475594881.001
Overview and Objective
- 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.
- Authors: Rodolfo Maino, Patrick A. Imam, Yasuhisa Ojima.
- Date: January 22, 2013.
Key Findings and Risk Assessment
- Loose fiscal policy, rising credit activity, and heightened risk appetite—attributable to the commodity boom—are fuelling price volatility in asset markets.
- Such price volatility poses significant risks to financial stability if left unchecked.
- Rising interconnectedness, potential increase in dollarization, and concentrated exposures are compounding financial sector risks.
- Macroprudential tools can complement fiscal and monetary policy adjustments to avoid the buildup of vulnerabilities in the banking sector.
Policy Implications and Recommendations
- Use macroprudential tools as a complement to:
- Fiscal policy adjustments.
- Monetary policy adjustments.
- Focus macroprudential measures on:
- Managing procyclical risks arising from credit booms and asset price volatility.
- Addressing cross-sectional risks from concentrated exposures and interconnectedness.
- Mitigating risks associated with potential increases in dollarization.
- Emphasize early identification of vulnerabilities to prevent systemic risk buildup in the banking sector.
Thematic Subjects and Keywords
- Subjects: Banking; Commercial banks; Credit; Financial institutions; Financial sector policy and analysis; Financial sector stability; Macroprudential policy; Money; Systemic risk.
- Keywords: bank financial system regulator; banking system in Mongolia; Commercial banks; cost of capital; Credit; Financial sector stability; financial system; foreign exchange; Global; heightened risk appetite; inflation rate; Macrofinancial Linkages; Macroprudential Policies; Macroprudential policy; monetary policy; monetary policy tool; Mongolia; Mongolia context; Mongolia's financial system; natural resource curse; resource allocation; risk identification; Systemic Risk; WP.