{ "title": "Time Waits for No Man: How to Secure Financial Stability in 2011", "publication": "IMF Blog, January 25, 2011", "sourceUrl": "https://www.imf.org/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011", "canonical": "https://www.imf.org/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011", "overlayPath": "/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011/index.md", "summary": "More than three years after the onset of the financial crisis, global financial stability is still not assured.", "sections": [ { "heading": "Key messages", "content": "- More than three years after the onset of the financial crisis, global financial stability is still not assured.\n- Policymakers need to step up efforts to tackle pressing policy challenges, such as sovereign risk, banking system vulnerabilities, and increased global capital flows.\n- Press ahead with structural solutions to longstanding financial problems." }, { "heading": "Context and presentation", "content": "- Presented by José Viñals in Johannesburg, South Africa.\n- Date: January 25, 2011." }, { "heading": "Financial stability challenges", "content": "- Sovereign risk\n - High public debt levels have sustained market concerns about sovereign risk.\n - Spillovers have affected a greater number of countries, mostly in the euro area.\n - An adverse feedback loop has developed between banking and sovereign credit risks in some euro area countries: the fate of some banks is increasingly intertwined with that of their sovereign—and vice versa.\n- Banking system fragilities\n - Markets are questioning the quality of many bank assets, reflecting concerns about banks’ exposure to countries facing sovereign pressures and exposure to real estate loans.\n - Banks face significant funding needs over the next two years; sovereigns will also need to refinance their debt over that period, creating competition for limited funding resources.\n - Many banks still need to raise their capital levels and improve the quality of their capital to reassure investors and to meet the more stringent Basel III standards.\n - If unresolved, these banking challenges would hinder the provision of credit to companies and households and would hurt the global economic recovery.\n- Capital inflows to emerging market economies\n - Rapid rebound in capital inflows can fuel asset price bubbles and strain absorptive capacity of local financial systems.\n - Current assessment: at the early stages of such a cycle, but vigilance is required." }, { "heading": "Policy priorities and recommendations", "content": "- General\n - Time is of the essence in addressing immediate policy challenges—particularly in the euro area—and in finding a better balance between macroeconomic and structural financial policies.\n - Without timely policy responses, global financial stability and sustainable growth will remain elusive.\n- Europe\n - Break the adverse feedback loop between sovereigns and banks.\n - Contain sovereign risk through credible, medium-term fiscal consolidation strategies.\n - Repair the financial system via a comprehensive plan to reduce uncertainty about banks and help restore investor confidence, including:\n - improved bank transparency;\n - greater firepower for the European Financial Stability Facility (EFSF);\n - a decisive pursuit of recapitalization and restructuring of banks;\n - better economic governance for the European Union.\n- United States\n - Put in place a credible strategy for medium-term fiscal consolidation to avoid a potential, sharp rise in long-term interest rates.\n - Increase efforts to address effects of still-damaged real estate markets on banks.\n- Emerging markets\n - Act now to avoid future crises by maintaining the appropriate mix of macroeconomic and prudential financial policies to manage capital inflows.\n - Deepen and strengthen local capital markets and market infrastructures to become more resilient.\n- Global regulatory agenda\n - Ensure continued progress on the global financial policy agenda and that financial systems adapt to regulatory reform.\n - Adopt new regulations consistently across the world, including on systemically important financial institutions and the so-called “shadow” banking sector.\n - Improve supervision and bank resolution regimes to work more effectively within—and across—national borders to safeguard financial stability.\n\nSource: José Viñals, \"Time Waits for No Man: How to Secure Financial Stability in 2011\", January 25, 2011.\n\n---\n\n Content in this bundle\n\n- 012511a\n - 012511a (PDF){rel=\"external\" type=\"text/html; charset=utf-8\"}\n- 时不我待：2011年如何确保金融稳定 -- 作者：José Viñals\n - 时不我待：2011年如何确保金融稳定 -- 作者：José Viñals (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 时不我待：2011年如何确保金融稳定 -- 作者：José Viñals (PDF){rel=\"external\" type=\"application/pdf\"}\n- 時計の針は進み続ける：2011年、金融の安定性の確立を目指して\n - 時計の針は進み続ける：2011年、金融の安定性の確立を目指して (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 時計の針は進み続ける：2011年、金融の安定性の確立を目指して (PDF){rel=\"external\" type=\"application/pdf\"}\n- Время не ждет: как обеспечить финансовую стабильность в 2011 году\n - Время не ждет: как обеспечить финансовую стабильность в 2011 году (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Время не ждет: как обеспечить финансовую стабильность в 2011 году (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- latest views on global financial stability\n\nSource: https://www.imf.org/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011/index.md)", "[Structured JSON version](/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011/index.json)", "[Bundle manifest](/en/blogs/articles/2011/01/25/how-to-secure-financial-stability-in-2011/bundle-manifest.json)", "Authors: JosVials", "Published: January 25, 2011", "More than three years after the onset of the financial crisis, global financial stability is still not assured.", "Policymakers need to step up efforts to tackle pressing policy challenges, such as sovereign risk, banking system vulnerabilities, and increased global capital flows.", "Press ahead with structural solutions to longstanding financial problems.", "Presented by José Viñals in Johannesburg, South Africa.", "Date: January 25, 2011.", "Sovereign risk", "Banking system fragilities", "Capital inflows to emerging market economies", "General", "Europe", "United States", "Emerging markets", "Global regulatory agenda", "**012511a**", "**时不我待：2011年如何确保金融稳定 -- 作者：José Viñals**", "**時計の針は進み続ける：2011年、金融の安定性の確立を目指して**", "**Время не ждет: как обеспечить финансовую стабильность в 2011 году**", "[latest views on global financial stability](http://www.imf.org/External/Pubs/FT/fmu/eng/2011/01/index.htm)" ], "related": [ { "title": "012511a", "role": "document", "sourceUrl": "http://www.imf.org/external/arabic/np/vc/2011/012511a.pdf", "binary": { "path": "/external/arabic/np/vc/2011/012511a.pdf", "mime": "text/html; 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