{ "title": "The New Global Imbalance: Too Much Financial Risk-Taking, Not Enough Economic-Risk Taking", "publication": "IMF Blog, October 8, 2014", "sourceUrl": "https://www.imf.org/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking", "canonical": "https://www.imf.org/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking", "overlayPath": "/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/index.md", "summary": "Policymakers face a new global imbalance: not enough economic risk-taking to support growth, and increasing excesses in financial risk-taking that pose stability challenges.", "sections": [ { "heading": "Key messages", "content": "- Policymakers face a new global imbalance: not enough economic risk-taking to support growth, and increasing excesses in financial risk-taking that pose stability challenges.\n- Banks are safer but may not be strong enough to vigorously support the recovery; risks are shifting to the shadow banking system as market and liquidity risks rise.\n- To address the imbalance, promote economic risk-taking by improving monetary policy transmission to the real economy and address financial excesses through better micro- and macroprudential policies." }, { "heading": "Global context and dynamics", "content": "- More than six years after the start of the financial crisis, the global recovery still relies heavily on accommodative monetary policies in advanced economies.\n- The impact of monetary ease has been uneven: better in the United States and Japan, less so in Europe and in emerging markets.\n- Prolonged monetary ease has encouraged the buildup of excesses in financial risk-taking, producing:\n - elevated prices across a range of financial assets,\n - credit spreads too narrow to compensate for default risks in some segments,\n - and, until recently, record-low volatility indicating investor complacency.\n- These developments have occurred across a broad range of asset classes and across many countries simultaneously.\n- Corporate leverage has continued to rise in emerging markets." }, { "heading": "Assessment of banks and credit supply", "content": "- Banks have increased capital levels and liquidity and are \"much safer now.\"\n- Analysis of 300 large banks in advanced economies found:\n - banks representing almost 40 percent of total assets are not strong enough to supply adequate credit in support of the recovery,\n - in the euro area, this proportion rises to about 70 percent.\n- Implication: many banks need fundamental overhauls of their business models, including:\n - repricing existing business lines,\n - reallocating capital across activities,\n - consolidation,\n - retrenchment.\n- The comprehensive assessment of balance sheets by the European Central Bank provides a strong starting point for necessary changes in bank business models.\n- When banks meet capital adequacy standards they are \"safe enough to lead a 'normal life'\"; however, many countries need banks to operate as \"athletes\" that can vigorously support the recovery." }, { "heading": "Shadow banking, markets, and liquidity risks", "content": "- Capital markets are providing more significant sources of financing, shifting risks to shadow banks.\n- Credit-focused mutual funds have seen massive asset inflows and have collectively become a very large owner of U.S. corporate and foreign bonds.\n- Fund inflows have created an illusion of liquidity in fixed income markets: liquidity promised to investors in good times may exceed available market liquidity in times of stress, especially as banks have less capacity to make markets.\n- Emerging markets now receive more than $4 trillion, or about 13 percent of advanced-economy portfolio investors' total investments; this share has doubled over the past decade.\n- Closer financial links mean shocks from advanced economies will propagate more quickly to emerging markets.\n- Combined effects can amplify shocks on asset prices, causing sharper price falls and more market stress; such scenarios could hurt the global economy and, at the limit, compromise global financial stability.\n- Triggers could include a wide variety of shocks, such as geopolitical flare-ups or a \"bumpy\" normalization of U.S. monetary policy." }, { "heading": "Policy recommendations and measures", "content": "- Maintain accommodative monetary policies to support the recovery so long as demand stays weak, but recognize monetary policy alone cannot accomplish everything.\n- Complement monetary policy with structural reforms, smart fiscal policies, and financial policies.\n- Two key areas for financial policy action:\n 1. Improve the flow of bank credit to the economy by facilitating structural transformation of bank business models:\n - Supervisors should facilitate banks' business-model adjustments to improve profitability without taking excessive risks and to support lending.\n - This is particularly important in Europe where banks play a major role in financing the economy.\n 2. Design and implement a range of micro- and macroprudential policies to address financial excesses:\n - In asset management, increase oversight to ensure redemption terms are better aligned with underlying liquidity conditions.\n - Implement more comprehensive monitoring and reporting of leverage in nonbank sectors and in corporate sectors of emerging markets to identify potential vulnerabilities.\n - To safeguard against global liquidity strains, deepen bilateral and multilateral swap lines to mitigate excessive volatility.\n- These policies aim to make financial institutions more resilient and to contain procyclical asset price and credit dynamics, addressing growing risks in shadow banking—particularly market and liquidity risks.\n- Policymakers need to be alert and take further actions now to promote economic risk-taking in support of growth and to address excesses in financial risk-taking to maintain stability.\n\nJosé Viñals, October 8, 2014\n\n---\n\n Content in this bundle\n\n- 新的全球失衡：金融风险承担过度，经济风险承担不足; iMFdirect博客; 2014年10月8日\n - 新的全球失衡：金融风险承担过度，经济风险承担不足; iMFdirect博客; 2014年10月8日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - 新的全球失衡：金融风险承担过度，经济风险承担不足; iMFdirect博客; 2014年10月8日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Full Report\n - Full Report (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - Full Report (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- https://www.imf.org/wp-content/uploads/2014/10/gfsr-vinals-blog-chart-rev.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking" } ], "bullets": [ "[Markdown version](/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/index.md)", "[Structured JSON version](/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/index.json)", "[Bundle manifest](/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/bundle-manifest.json)", "Authors: Jose-Vinals", "Published: October 8, 2014", "Policymakers face a new global imbalance: not enough economic risk-taking to support growth, and increasing excesses in financial risk-taking that pose stability challenges.", "Banks are safer but may not be strong enough to vigorously support the recovery; risks are shifting to the shadow banking system as market and liquidity risks rise.", "To address the imbalance, promote economic risk-taking by improving monetary policy transmission to the real economy and address financial excesses through better micro- and macroprudential policies.", "More than six years after the start of the financial crisis, the global recovery still relies heavily on accommodative monetary policies in advanced economies.", "The impact of monetary ease has been uneven: better in the United States and Japan, less so in Europe and in emerging markets.", "Prolonged monetary ease has encouraged the buildup of excesses in financial risk-taking, producing:", "These developments have occurred across a broad range of asset classes and across many countries simultaneously.", "Corporate leverage has continued to rise in emerging markets.", "Banks have increased capital levels and liquidity and are \"much safer now.\"", "Analysis of 300 large banks in advanced economies found:", "Implication: many banks need fundamental overhauls of their business models, including:", "The comprehensive assessment of balance sheets by the European Central Bank provides a strong starting point for necessary changes in bank business models.", "When banks meet capital adequacy standards they are \"safe enough to lead a 'normal life'\"; however, many countries need banks to operate as \"athletes\" that can vigorously support the recovery.", "Capital markets are providing more significant sources of financing, shifting risks to shadow banks.", "Credit-focused mutual funds have seen massive asset inflows and have collectively become a very large owner of U.S. corporate and foreign bonds.", "Fund inflows have created an illusion of liquidity in fixed income markets: liquidity promised to investors in good times may exceed available market liquidity in times of stress, especially as banks have less capacity to make markets.", "Emerging markets now receive more than $4 trillion, or about 13 percent of advanced-economy portfolio investors' total investments; this share has doubled over the past decade.", "Closer financial links mean shocks from advanced economies will propagate more quickly to emerging markets.", "Combined effects can amplify shocks on asset prices, causing sharper price falls and more market stress; such scenarios could hurt the global economy and, at the limit, compromise global financial stability.", "Triggers could include a wide variety of shocks, such as geopolitical flare-ups or a \"bumpy\" normalization of U.S. monetary policy.", "Maintain accommodative monetary policies to support the recovery so long as demand stays weak, but recognize monetary policy alone cannot accomplish everything.", "Complement monetary policy with structural reforms, smart fiscal policies, and financial policies.", "Two key areas for financial policy action:", "These policies aim to make financial institutions more resilient and to contain procyclical asset price and credit dynamics, addressing growing risks in shadow banking—particularly market and liquidity risks.", "Policymakers need to be alert and take further actions now to promote economic risk-taking in support of growth and to address excesses in financial risk-taking to maintain stability.", "**新的全球失衡：金融风险承担过度，经济风险承担不足; iMFdirect博客; 2014年10月8日**", "**Full Report**", "[https://www.imf.org/wp-content/uploads/2014/10/gfsr-vinals-blog-chart-rev.jpg](https://www.imf.org/wp-content/uploads/2014/10/gfsr-vinals-blog-chart-rev.jpg)" ], "related": [ { "title": "新的全球失衡：金融风险承担过度，经济风险承担不足; iMFdirect博客; 2014年10月8日", "role": "document", "sourceUrl": "http://www.imf.org/external/chinese/np/blog/2014/100814c.pdf", "summary": { "path": "/external/chinese/np/blog/2014/100814c.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/external/chinese/np/blog/2014/100814c.pdf", "mime": "application/pdf" } }, { "title": "Full Report", "role": "full-report", "sourceUrl": "http://www.imf.org/external/pubs/ft/gfsr/2014/02/pdf/text.pdf", "summary": { "path": "/external/pubs/ft/gfsr/2014/02/pdf/text.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/external/pubs/ft/gfsr/2014/02/pdf/text.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/index.md", "json": "/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/index.json", "bundleManifest": "/en/blogs/articles/2014/10/08/the-new-global-imbalance-too-much-financial-risk-taking-not-enough-economic-risk-taking/bundle-manifest.json" }, "generatedAtUtc": "2026-08-28T19:38:12.312Z" }