Fiscal Affairs Department's 60th Anniversary Conference: "60 Years of FAD: The Fiscal Affair Continues"
October 3, 2024
The Fiscal Affairs Department (FAD) of the IMF will celebrate 60 years since it was formed in 1964 with a one-day conference, “60 Years of FAD: The Fiscal Affair Continues,“ on November 4, 2024, in Washington D.C., USA.
The Managing Director’s Remarks at GCC Ministerial Meeting
October 3, 2024
Embedded in Nature: Nature-Related Economic and Financial Risks and Policy Considerations
October 3, 2024
The economy is embedded in, and dependent on, nature. Yet economic activity is degrading nature at an unprecedented pace. Interacting with climate change, nature loss and transformation generates significant threats to the global economy and financial system. However, work on the implications of nature-related risks for macroeconomic and financial sector policies remains at an early stage. This note seeks to contribute to this emerging policy space in three main ways: (i) it proposes a conceptual framework for understanding nature-related risks by mapping out macroeconomic transmission channels, emphasizing their impact on the economy and financial systems through “double materiality;” (ii) it conducts empirical analysis, finding that nearly 38 percent of bank loans of the 100 largest global banks are to harmful subsidies-dependent sectors and 44 percent are exposed to conservation areas under the Global Biodiversity Framework, and that industries most exposed to nature degradation are not well prepared to manage these risks; and (iii) it discusses takeaways for macroeconomic and financial sector policies and frameworks.
Guinea-Bissau is Using Blockchain to Boost Fiscal Transparency
October 2, 2024
To better manage its public sector wage bill, Guinea-Bissau has embraced blockchain technology, a secure digital mechanism that enables tracking and reporting on wage expenditure for civil servants.
IMF Staff Completes Mission to South Sudan for the Third Review of a Staff-Monitored Program with Board Involvement
October 2, 2024
Portugal: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Portugal
October 2, 2024
Portugal achieved a remarkable recovery from the successive shocks that hit the global economy since the pandemic. Growth exceeded the euro area (EA) average. Inflation decelerated fast. The fiscal position improved substantially, achieving a large surplus in 2023 and an impressive public debt reduction by 36 percentage points of GDP since 2020 to 99 percent of GDP. The external position strengthened, buoyed by vigorous exports including tourism, EU funds, and, more recently, better terms of trade. Financial stability indicators improved, reflecting a reduction in systemic risks. At this juncture, a soft landing is within reach. However, subdued productivity growth, population aging, and low investment remain key constraints to higher medium-term growth and better living standards.
Positioning Central Bank Digital Currency in the Payments Landscape
October 2, 2024
The IMF is frequently approached by central banks seeking guidance on the balance between central bank digital currency (CBDC), fast payment systems (FPS), and electronic money (e-money) solutions. Common questions arising include: Do central banks need a CBDC when already equipped with other well-established digital payments systems? For central banks with less-developed solutions: Should central banks establish one system over the other? This discussion is then compounded by the reality of constrained resources.
A holistic exploration and decision process on the issuance of retail CBDC requires a comprehensive assessment of legal, macro-financial, and operational considerations. This note focuses on the comparison of retail CBDC—that is, the presence of digital central bank money available to the general public—with FPS and e-money systems from a payments perspective, and how CBDC may support a jurisdiction’s vision on payments in the digital age. The note does not seek to advocate for CBDC over FPS or e-money. The balance of arguments for any one system may change over time, and the choice may not be mutually exclusive in many jurisdictions. In the future, it is possible to envisage the coexistence of FPS, e-money, and CBDC in many payment landscapes across the world.
Through good design, all three systems could meet central bank objectives such as payments efficiency and support financial inclusion; some benefits are unique to CBDC, such as maintaining access to central bank money in an increasingly digitalized age. These considerations may be particularly relevant in the context of a retail payments landscape which may otherwise be moving towards 100 percent privately issued money.
While multiple systems could meet the same objectives, a jurisdiction’s evaluation will be dependent on the distinct features and capacity of its current, and emerging, financial landscape. A landscape review is an important tool for central banks when assessing how policy objectives are being achieved today, and if necessary pre-conditions for new systems are in place, or could be established in future. Authorities’ capacity and capability to not only implement but supervise and regulate any system will be important. Any new system will have non-negligible costs, and different systems will potentially have different implications for the distribution of costs between the public and private sectors. Furthermore, a jurisdiction’s mandate and ability to apply their powers around payments may ultimately determine how well any system can fulfill its objectives.
Given the early stage of CBDC development, no singular strategy exists in the context of the questions put forward. While central banks will make choices unique to their circumstances, it remains important for central banks to establish a strategy that allows them at minimum to monitor trends and core benefits of multiple solutions as developments occur to allow them to plan, adapt, and drive developments in their payments landscape.