Global Financial Stability Report, October 2009: Navigating the Financial Challenges Ahead
Global Financial Stability Report, November 2, 2009
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- Global Financial Stability Report, October 2009: Navigating the Financial Challenges Ahead
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Bibliographic details
- Published: November 2, 2009
- Series: Global Financial Stability Report
- DOI: https://doi.org/10.5089/9781589068100.082
Executive summary and scope
- Chronicles the evolution of the path toward reestablishing sound credit intermediation.
- Identifies near-term risks that could interrupt restoration of credit intermediation, including the rising burden of sovereign financing.
- Examines how to restart securitization markets and the pitfalls if done improperly.
- Assesses the effectiveness of unconventional public sector interventions and sets out principles for disengagement.
- Discusses design of medium-term policies aimed at reshaping the financial system to make it more resilient and stable.
Near-term risks and vulnerabilities
- Rising burden of sovereign financing as a material near-term risk to financial stability.
- Risks associated with premature or improperly structured revival of securitization markets.
- Challenges in transitioning away from unconventional public sector interventions without disrupting markets.
Securitization markets: restart considerations and pitfalls
- Key issues in restarting securitization markets:
- Need for robust due diligence.
- Market discipline and transparency concerns.
- Risks tied to complex structures such as mezzanine tranche and equity tranche exposures.
- Pitfalls if securitization is restarted improperly:
- Re-emergence of market dysfunction.
- Potential for reaccumulation of poorly underwritten credit risk.
Public sector interventions and disengagement principles
- Evaluation of unconventional interventions:
- Effectiveness depends on design, scale, and exit planning.
- Principles for disengagement:
- Clear timelines and conditionality.
- Measures to limit moral hazard.
- Steps to restore private-sector intermediation gradually.
Medium-term policy design to strengthen resilience
- Objectives for medium-term policies:
- Reshape the financial system to enhance resilience and stability.
- Strengthen capital bases and market discipline.
- Improve transparency of financial statements and risk exposures.
- Policy elements discussed include:
- Capital surcharges.
- Reforms to public financial management (PFM) where relevant to sovereign financing risk.
- Regulatory adjustments for commercial banks and financial institutions.
Geographic and thematic coverage
- Regions and themes highlighted in keywords:
- Africa, Asia and Pacific, Caribbean, Europe, Middle East and Central Asia, Global, United States.
- Topics: Banking, Commercial banks, Credit, Financial crises, Financial institutions, Financial services, Financial statements, Loans, Money, Public financial management (PFM), Securitization, capital market, market discipline, emerging market risk.
Content in this bundle
- Navigating the Financial Challenges Ahead -- Global Financial Stability Report
References
- https://www.imf.org/en/publications/gfsr
- United States and the IMF
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- Banking
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- Financial institutions
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- Financial statements
- Loans
- Money
- Public financial management (PFM)
- Securitization
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