## Reforming the Financial Landscape After the Crisis _IMF Blog, April 13, 2010_ ## Source details **Canonical URL:** [Reforming the Financial Landscape After the Crisis](https://www.imf.org/en/blogs/articles/2010/04/13/reforming-the-financial-landscape-after-the-crisis) ## Other formats - [Markdown version](/en/blogs/articles/2010/04/13/reforming-the-financial-landscape-after-the-crisis/index.md) - [Structured JSON version](/en/blogs/articles/2010/04/13/reforming-the-financial-landscape-after-the-crisis/index.json) - [Bundle manifest](/en/blogs/articles/2010/04/13/reforming-the-financial-landscape-after-the-crisis/bundle-manifest.json) ## Bibliographic details - Published: April 13, 2010 --- ### Publication and release - Title: Reforming the Financial Landscape After the Crisis - Date: April 13, 2010 - Format: Three analytical chapters from the upcoming Global Financial Stability Report released (Chapter 2 published on April 13, 2010; Chapter 1 comes out next week; Chapter 3 and Chapter 4 referenced). - Institutional context: IMF blog post on IMFBlog. ### Chapter 2 — central questions and framing - Focus: Two questions for policymakers reforming the financial landscape: - Whether systemic risk would be reduced by placing all regulatory functions under the purview of one entity—be that a single agency or an overseeing council? - If capital surcharges on financial institutions were used to limit systemic risk associated with domino-like failures, how would such surcharges be constructed? - Analytical stance: - "we do not have “the” answer to these difficult questions, but we think we have been able to frame the debate in a constructive way and provide guidance to policymakers on these important issues." - Capital surcharges on systemically important institutions are presented as one method within a multipronged approach, not necessarily the only solution. - Policy implication: - There is a need to examine a number of approaches to determine which one or combination will best reduce systemic risk. ### Chapter 3 — market infrastructure and OTC derivatives - Focus: Improving market infrastructure to help limit systemic risk. - Specific market examined: over-the-counter derivatives market, with attention to problems revealed by Lehman’s bankruptcy and AIG’s near miss in the credit default swap market. - Analytical point: The IMF examines how central counterparties for clearing these contracts can act as shock-absorbers in the financial system. - Multimedia: The chapter release is accompanied by a video (YouTube link embedded in the source). ### Chapter 4 — global liquidity and capital inflows - Focus: Vulnerabilities that may be building up in some countries partly as a result of low interest rates and ample liquidity in the main advanced economies’ monetary policy stances. - Key findings: - The chapter documents that global liquidity plays a role in capital inflows to emerging and some other advanced countries where interest rates are higher and growth prospects are stronger. - An increase in capital inflows is positive following their dramatic decline during the height of the crisis, but excessive inflows can exacerbate inflation pressures or asset price bubbles. - Policy recommendations and options for liquidity-receiving economies: - First-best solution: macroeconomic policies, including flexible exchange rates, and enhanced prudential regulations for the financial sector, can go a long way in managing a surge of capital inflows. - The chapter also reviews international experience with capital controls as part of the policy toolkit. - Multimedia: The chapter release is accompanied by a video (YouTube link embedded in the source). ### Overarching messages and guidance to policymakers - The released chapters aim to frame debates and provide guidance on systemic risk reduction, market infrastructure improvement, and management of capital inflows. - Emphasis on a multipronged approach: capital surcharges are one tool among several; flexible macroeconomic policies and prudential regulation are highlighted as first-best responses to surges in capital inflows. ### About the blog and institutional note - IMFBlog is a forum for the views of IMF staff and officials on pressing economic and policy issues of the day. - The IMF is based in Washington D.C. and is an organization of 191 countries, working to foster global monetary cooperation and financial stability around the world. - Disclaimer: The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board. *Source: Reforming the Financial Landscape After the Crisis — IMFBlog, April 13, 2010.* --- ## Content in this bundle - **Chap2** - [Chap2 (Markdown version)](/external/pubs/ft/gfsr/2010/01/pdf/chap2.pdf.md){rel="alternate" type="text/markdown"} - [Chap2 (PDF)](/external/pubs/ft/gfsr/2010/01/pdf/chap2.pdf){rel="external" type="application/pdf"} - **chapter 3 MakIng over-the-counter derIvatIves saFer: the role oF central counterpartIes** - [chapter 3 MakIng over-the-counter derIvatIves saFer: the role oF central counterpartIes (Markdown version)](/external/pubs/ft/gfsr/2010/01/pdf/chap3.pdf.md){rel="alternate" type="text/markdown"} - [chapter 3 MakIng over-the-counter derIvatIves saFer: the role oF central counterpartIes (PDF)](/external/pubs/ft/gfsr/2010/01/pdf/chap3.pdf){rel="external" type="application/pdf"} - **chapter 4 global lIquIdIty expansIon: eFFects on “receIvIng” econoMIes and polIcy response optIons** - [chapter 4 global lIquIdIty expansIon: eFFects on “receIvIng” econoMIes and polIcy response optIons (Markdown version)](/external/pubs/ft/gfsr/2010/01/pdf/chap4.pdf.md){rel="alternate" type="text/markdown"} - [chapter 4 global lIquIdIty expansIon: eFFects on “receIvIng” econoMIes and polIcy response optIons (PDF)](/external/pubs/ft/gfsr/2010/01/pdf/chap4.pdf){rel="external" type="application/pdf"} --- ## References - [These chapters](http://www.imf.org/external/pubs/ft/survey/so/2010/NEW041310A.htm) _Source: https://www.imf.org/en/blogs/articles/2010/04/13/reforming-the-financial-landscape-after-the-crisis_