## Transcript of a Press Briefing with William Murray, Deputy Spokesman, Communications Department

_IMF News, March 17, 2016_

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## Bibliographic details
- Published: March 17, 2016

---

### Overview of the briefing
- Date and location: Thursday, March 17, 2016; Washington, D.C.
- Embargo timing for the launched paper and briefing: 10:30 a.m. Washington time, that's 14:30 GMT.
- Launched paper: "Strengthening the International Monetary System, a Stock Taking" (led by Siddharth Tiwari, Director, Strategy, Policy and Review Department).
- Contacts provided: Media Relations E-mail: media@imf.org; Phone: 202-623-7100.
- Purpose: Stock-taking on the international monetary system ahead of Spring Meetings; outline of near-term IMF workstreams and calendar of senior management travel and spring meetings events.

### Five systemic challenges identified in the paper
- "All of the imbalances have shrunk post crisis" driven by demand compression.
- "The central role of one or two reserve currencies implies that they can have significant impact on others, constraining domestic policy choices."
- Increased interconnectedness and permanent capital flow volatility.
- Need for more focus on the non-financial side after substantial work on the financial side.
- Transitions in three currencies (dollar, euro, and the yen) will lead to volatility and strengthen the need for a robust safety net.

### Immediate global priorities and context
- Priority objectives:
  - Raising post crisis growth in advanced countries.
  - Ensuring emerging markets regain prior growth momentum and resume the convergence of living standards.
- Key contextual developments:
  - Historic drop in commodity prices requiring broad adjustment.
  - China's rebalancing toward slower but safer growth.
  - Asynchronous monetary policy among major economies.
- Timeframes and historical reference points mentioned:
  - Last comprehensive discussion in 2011.
  - "12 months back" the Global Policy Agenda indicated starting this conversation.
  - Reference to "50 years" of dollar centrality.

### IMF near-term workstreams highlighted
- Capital flows workstream (three phases):
  - Phase 1: Understand the landscape — how volatile flows are and their directions.
  - Phase 2: Assess how countries have coped with applying the institutional view — has it worked and where difficulties arose.
  - Phase 3: Review of the institutional view toward the end of the year.
- Strengthening the global financial safety net:
  - Stock-taking exercise already initiated; first paper on the global financial safety net and the size of the Fund issued "last week" and to be discussed by the Board "in another week".
  - Five levels of the global financial safety net identified:
    - One, reserves.
    - Two, bilateral agreements.
    - Three, regional arrangements.
    - Four, IMF at the center of the multilateral arrangement.
    - Five, private sector issues like either GDP linked bonds or private sector hedges.
- Role of the SDR:
  - The Fund has been asked to look at the role of the SDR and will return to it "in a couple of months".
- Stock-taking role:
  - The paper is positioned as an initial, membership-engagement stage ("stock taking") rather than a set of finalized proposals.

### Findings and policy orientation on safety nets and market discipline
- Institutional remit:
  - IMF mandate covers both liquidity and balance of payments issues across exchange rate regimes.
- Policy stance:
  - Best safety net begins with "good policies" — securing fundamentals and enabling shock response via liquidity or other lines.
  - Market discipline is important, but when flows overwhelm domestic financial systems, measures are needed to make systems safer.
- On reserve currency centrality:
  - Centrality itself is longstanding; recent concern centers on increased volatility linked to asynchronous monetary policy rather than centrality per se.
  - Special attention to "innocent bystanders" — emerging markets affected by external policy-driven volatility.

### Views on the Fund's size and scope
- Mandated review:
  - Under IMF rules the size of the Fund must be revisited every five years; this stock-taking on size is part of that mandate.
- First-stage conversation:
  - The initial conversation is about how large the institution should be relative to other buffers (reserves, regional arrangements) and risks (capital flows), not an immediate presumption of boosting resources.

### Country-specific points and program status (as discussed)
- Argentina:
  - IMF welcomed the agreement between Argentina and a number of its creditors as an important step toward reengagement with financial markets.
  - Collective action clauses (CACs) endorsed by the Executive Board are important; wider adoption is a positive trend.
  - IMF noted it is too early to draw firm systemic conclusions from the Argentina holdout agreement.
- Brazil:
  - IMF guidance: strengthen the macroeconomic framework to restore confidence and boost investment (inflation targeting, exchange rate flexibility, fiscal responsibility).
  - Outlook reference: "another year of contraction expected for 2016."
  - Domestic issues mentioned: political unrest and inflation "going over 10 percent."
  - IMF view: independent, transparent, and accountable central banks are beneficial; 2015 Article IV report contained a section on Brazil's central bank independence.
  - On financing: IMF not aware of any request for IMF financing; Article IV preparatory process under way.
- Greece:
  - Mission on ground in Athens discussing microeconomic policies to pave the way for a comprehensive IMF-supported program.
  - IMF position reiterated: a strong set of policies by the authorities together with debt relief from European partners are essential ingredients of a program the IMF could support.
  - No timing provided for completion of the review; Staff asked to avoid public detail while mission is in progress.
- Ukraine:
  - IMF will need more clarity on government status and policy commitments to engage on policies and pave the way for completion of the second review of the IMF program.
  - No specific timeline or deadline provided for concluding reviews; IMF staff remain engaged.
- Zimbabwe:
  - Recent mission: on the ground from February 24 through March 11 to conduct the third and final review of a Staff Monitored Program and the 2016 Article IV consultation.
  - Financing constraint: Zimbabwe cannot have an IMF financial arrangement while in arrears to the Poverty Reduction and Growth Trust; authorities plan to clear arrears.
  - Reported loan announcement in question: authorities announced plans for a loan "in the third quarter of up to $984 million" (question referenced by press; IMF described the process required to normalize relations with creditors).
- Russia:
  - IMF offered no substantive comment on market participation or external political pressures related to sovereign bond issuance; no specific IMF view provided in the briefing.

### Financial market and sectoral focus
- Nonbank financial sector:
  - Paper flags rising relevance/risks in the nonbank financial sector and identifies it as one of five areas needing more work.
- Fiscal and financial analytic chapters highlighted for Spring Meetings (launches and briefings scheduled):
  - Analytical Chapter of the Fiscal Monitor (focus: fiscal stabilization policies and incentives for innovation and productivity).
  - Global Financial Sector Report analytic chapters (including financial market spillovers from emerging markets and insurance sector trends and risks).
  - World Economic Outlook analytical chapters on capital flows to emerging markets and structural reform sequencing.

### IMF management travel and Spring Meetings calendar highlights (selected items and dates)
- Managing Director Christine Lagarde:
  - Vietnam address prior to March 17; travel to Beijing on March 20-21 for Annual China Development Forum (will address international monetary system matters).
  - Participation in "Nanjing Two" conference in Paris on March 31.
  - Frankfurt speech on April 5 at Goethe University (referred to as a "curtain raiser" for Spring Meetings).
  - Berlin participation on April 5 in Annual International Financial Institutions meeting hosted by Chancellor Merkel.
  - New York participation on April 7-8 at the Women in the World Summit and to receive Columbia University's global leadership award.
- Deputy Managing Directors and senior staff:
  - Min Zhu: Boao Forum participation in Haikou (March 23-24).
  - Mitsuhiro Furusawa and Masood Ahmed: panel at Johns Hopkins SAIS on March 22 at noon Washington time to present MCD paper “long-term growth prospects in the Middle East and Central Asia” (paper embargoed until March 21).
  - Furusawa: ASEAN meeting in Vientiane, Laos (April 2-3) and IMF Japan tax conference in Tokyo (April 6).
- Spring Meetings event schedule (selected):
  - March 31: Vitor Gaspar to present Analytical Chapter of the Fiscal Monitor at Peterson Institute.
  - April 4, 9:30 a.m. Washington time: Monetary and Capital Markets Department brief on analytic chapters of the Global Financial Sector Report.
  - April 6, 9:30 a.m. Washington time: Research Department launches Analytical Chapters of the World Economic Outlook.
  - April 12, 9:00 a.m.: Chief Economist Maurice Obstfeld unveils Chapter 1 of the Spring 2016 WEO.
  - April 13: Jose Vinals presents main chapter of the Spring 2016 Global Financial Sector Report; Vitor Gaspar briefs on the Fiscal Monitor.
  - April 14: Managing Director’s pre-IMFC press conference and launch of the updated Global Policy Agenda (updated every six months).

### Process and next steps emphasized
- The paper is a starting point for membership discussion; the IMF will solicit and receive suggestions from members before proposing specific reforms.
- A series of follow-up papers and consultations expected "in the coming months."
- Paris "Nanjing 2" conference at end of March and G20 focus to shape the ongoing public and policy debate.
- For media follow-up on the paper: media@imf.org (attention Raphael Anspach) or contact Raphael Anspach in media relations.

*Transcript of a Press Briefing with William Murray, Deputy Spokesman, Communications Department — March 17, 2016*

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## References

- [Argentina and the IMF](http://www.imf.org/external/country/ARG/index.htm)
- [Brazil and the IMF](http://www.imf.org/external/country/BRA/index.htm)
- [France and the IMF](http://www.imf.org/external/country/FRA/index.htm)
- [Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)
- [Ukraine and the IMF](http://www.imf.org/external/country/UKR/index.htm)
- [Zimbabwe and the IMF](http://www.imf.org/external/country/ZWE/index.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr)
- [Proposals for a Sovereign Debt Restructuring Mechanism (SDRM) -- A Factsheet](https://www.imf.org/external/np/exr/facts/sdrm.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Transcripts](https://www.imf.org/en/news/searchnews)
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_Source: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr031716_