IMF Executive Board Discusses Approaches to Macrofinancial Issues in Article IV Surveillance

IMF News, March 28, 2017

Source details

Canonical URL: IMF Executive Board Discusses Approaches to Macrofinancial Issues in Article IV Surveillance

Press Release No. 17/103
Date of publication: March 28, 2017
IMF Communications Department; MEDIA RELATIONS; PRESS OFFICER: Raphael Anspach; Phone: +1 202 623-7100; Email: MEDIA@IMF.org
On March 6, 2017, the Executive Board discussed progress in incorporating macrofinancial analysis and policy advice into Article IV surveillance, drawing on the staff paper “Approaches to Macrofinancial Surveillance in Article IV Reports.”
Key motivating events and initiatives:
- The 2008 global financial crisis highlighted the importance of financial sector surveillance and macrofinancial linkages.
- The 2014 Triennial Surveillance Review (TSR) recommended that macrofinancial analysis become an integral part of Article IV consultations.
- The Managing Director’s Action Plan for strengthening surveillance outlined specific steps to implement the TSR recommendations.

Staff actions and outputs:
- Staff developed new analytical tools and boosted staff training.
- More than 60 Article IV consultations sought to strengthen macrofinancial coverage in staff reports.
- The staff paper examined:
- (i) the conceptual underpinnings of the IMF’s macrofinancial surveillance,
- (ii) how macrofinancial links have been integrated into baseline economic projections and risk assessments,
- (iii) how strengthening analytical foundations can inform advice on financial, fiscal, monetary, and other policies to promote growth and build resilience, and
- (iv) steps to further strengthen macrofinancial surveillance.
Intended use: lessons learned are intended to guide staff in progressively extending this work across the IMF’s membership.

General view:
- Executive Directors welcomed the discussion and commended progress in mainstreaming macrofinancial analysis in line with the 2014 TSR and the Managing Director’s Action Plan.
- Directors supported progressively mainstreaming macrofinancial surveillance across the membership.
Specific endorsements and emphases:
- Support for integrating macrofinancial analysis into baseline projections, risk assessments, and policy advice in Article IV staff reports.
- Surveillance should include a two‑way assessment of macrofinancial risks and macroeconomic stability.
- Financial sector recommendations should be integrated with advice on fiscal, monetary, and structural policies.
- Macrofinancial analysis is strengthening the traction of Fund surveillance and fostering more effective dialogue with country authorities.
- Staff should remain flexible and pragmatic while extending the initiative, taking into account country‑specific circumstances, institutions, policy frameworks, economic structures, and policy challenges.
- Consistent high quality and evenhanded surveillance across the membership is required.
- Country surveillance should take due account of the circumstances of members participating in economic or monetary unions.

Gaps and issues to address (as identified by Directors):
- Legal constraints on the provision of confidential supervisory data.
- Need to give greater attention to how the financial sector would condition the outlook for credit and output.
- Deepen analysis of the macroeconomic effects of financial shocks.
- Incorporate quantitative approaches to assess financial risks.
- Improve the availability of financial data.
- Explore the contribution of the financial sector to long‑run growth and financial inclusion.
Policy and analytical guidance:
- Staff should consider how to integrate macrofinancial perspectives more fully into advice on the overall policy mix.
- Anchor advice on micro‑ and macroprudential policies on a solid risk assessment informed by a view about systemic risk.

Capacity-building and resources:
- Directors recognized considerable efforts to develop staff capacity and experience in macrofinancial analysis.
- Taking into account the Fund’s mandate and existing resource constraints, Directors encouraged staff to focus on efficient ways to support knowledge‑sharing and to advance the initiative within the Fund’s existing budgetary envelope.
Cooperation:
- Directors called on staff to strengthen cooperation and share expertise with other multilateral institutions as appropriate.
Follow-up:
- Directors looked forward to discussing progress at the time of the Comprehensive Surveillance Review in 2019.

Source: IMF Communications Department press release, March 28, 2017.