Rising Rates May Trigger Financial Instability, Complicating Fight Against Inflation
February 13, 2025
Banking systems are largely insulated from inflation, but vulnerabilities at some banks could lead to tradeoffs between containing inflation and protecting financial stability
Building Resilience and Boosting Growth in Asia
February 13, 2025
Inflation and Bank Profits: Monetary Policy Trade-offs
February 13, 2025
Given the recent surge in inflation and the resulting sharp monetary tightening, this note asks whether bank profits are exposed to inflation. While most banks tend to match income and expense exposures, 5 and 8 percent of banks in Advanced Economies (AE) and Emerging Market and Developing Economies (EMDE), respectively, are vulnerable to changes in inflation and interest rates due to differences in risk management practices and business structures, with 3 and 6 percent of AE and EMDE banks, respectively, at least as exposed as Silicon Valley Bank at the onset of its failure. If losses at individual banks leave room for wider panics—despite needed improvements in bank regulation and supervision and other ex ante measures—central banks may need to weigh raising rates to contain inflation against the potential for financial instability.
Namibia: Retail Central Bank Digital Currency Exploration and Roadmap
February 12, 2025
At the request of the Bank of Namibia (BoN), an IMF mission team conducted a technical assistance (TA) from January 15 to February 1, 2024. The mission assisted the authorities in establishing the groundwork for a feasibility study of a retail central bank digital currency (rCBDC) and drafting a roadmap for the BoN's CBDC exploration. The mission also reviewed requirements for rCBDC issuance, including institutional capacity, technology, cybersecurity, and legal foundations. The mission recommended the BoN assess how rCBDC can improve the payment systems and financial inclusion in Namibia compared to alternative solutions. The authorities are advised to establish a compelling rationale for rCBDC before embarking on a more resource-intensive undertaking. The mission suggested that the BoN continue developing expertise and capacity in rCBDC across policy, technology, and legal domains, including through continued engagement with stakeholders.
Eastern Caribbean Currency Union: IMF Staff Concluding Statement of the 2025 Mission on Common Policies for Member Countries
February 12, 2025
Namibia: Technical Assistance Report-Retail Central Bank Digital Currency Exploration and Roadmap
February 12, 2025
The Bank of Namibia (BON) explored the potential of Retail Central Bank Digital Currency (rCBDC). The key drivers included promoting financial inclusion, modernizing financial system modernization, as well as improving cross-border payments. The technical assistance (TA) mission aimed to provide the groundwork for a feasibility study of rCBDC and to draft a rCBDC exploration roadmap for the BON. The mission analyzed Namibia’s payment systems and financial inclusion and assessed the potential value propositions and drawbacks of rCBDC. Additionally, the mission evaluated the implications of rCBDC for monetary policy and financial stability, while assessing the BoN’s foundational requirements. Finally, the mission helped draft a rCBDC exploration roadmap, intending to foster a cohesive and coordinated approach for the BoN and external stakeholders. The mission’s findings will inform the development of the BoN's rCBDC position paper.
Republic of Azerbaijan: Technical Assistance Report-Modernizing Central Bank Communication
February 12, 2025
This report presents an analysis of the Central Bank of the Republic of Azerbaijan's (CBA) communication framework and offers recommendations for enhancement. The technical assistance mission, led by the IMF Monetary and Capital Markets Department, aimed to modernize the CBA's communication strategies to align with international best practices. The findings indicate that while the CBA has made significant progress in external communications, there are areas for improvement, particularly in formalizing communication processes and enhancing message clarity. Recommendations include strengthening the role of the Communications Division, adopting a proactive communication policy, and improving the monetary policy communication cycle. These changes are expected to elevate the CBA's communication to a policy tool that supports its objectives of price and financial stability.
Belize: Technical Assistance Report-Developing the Supervision of E-Money Issuers
February 12, 2025
IMF conducted a mission at the request of the Central Bank of Belize provided technical assistance focusing on developing a framework for the supervision of electronic money issuers in Belize. The mission reviewed existing approaches to supervising firms conducting regulated financial activities, as well as the regulatory framework and licensing practices for e-money issuers only to the extent that they influence and impact effective supervision. The mission also met with other key stakeholders from the public and private sector setting out nine key recommendations covering risk-based supervision, data collection, reconciliations, transparency, fund safeguarding, permitted investments, agents, inspection reports, and domestic collaboration.
Indonesia: Technical Assistance Report-Report of the Diagnostic Mission on Macro-relevant Climate Change Statistics (July 10–13, 2023)
February 12, 2025
Indonesia’s key climate change policy related-data needs stem from well-defined domestic policy priorities and international commitments. The domestic policy priorities are set in the long-term strategy for low-carbon and climate resilience as well as in the medium-term national plan that among others seeks to strengthen the environment condition and improving resilience against natural disasters and climate change. Indonesia has been producing a wide range of environmental and climate change related statistics since early 1980’s, but further enhancements are needed. The authorities are publishing several reports related to environmental statistics and environmental accounts (physical air emission accounts; physical energy flow accounts; physical and monetary assets account for land, timber, minerals and energy resources), albeit with some discrepancies between reports. In this context, a mission took place from July 10–13, 2023, funded by the Swiss State Secretariat for Economic Affairs and hosted by Badan Pusat Statistik, Indonesia. During this mission, discussions with authorities focused on key priorities and identifying the needed methodological improvement to physical energy flows and air emission accounts.
Colombia: Technical Assistance Report-Foreign Exchange Market Development and Regulatory Framework Review
February 12, 2025
This report provides an overview of the technical assistance provided by the International Monetary Fund (IMF) to the Banco de la República to support the authorities in reviewing the regulatory framework and formulating development strategies for the foreign exchange market.