Policy Papers

June 1, 2011

Mapping Cross-Border Financial Linkages - A Supporting Case for Global Financial Safety Nets

Description: This paper maps cross-border financial linkages and identifies factors that drive them, contributing to the discussion on the appropriate design of a global financial safety net (GFSN). It builds on previous staff work and complements the findings of the companion paper on the Analytics of Systemic Crises and the Role of Global Financial Safety Nets. This paper notes the growing roles of financial linkages and complexity in injecting latent instability into the global financial system, underscoring the value of a GFSN design that is effective in forestalling the risk that a localized liquidity shock propagates through the global financial network turning into a large-scale systemic crisis.

May 31, 2011

Analytics of Systemic Crises and the Role of Global Financial Safety Nets

Description: In response to the global crisis, the Fund overhauled its lending toolkit and boosted its resources, strengthening its ability to pre-empt financial crises. This paper—with the companion paper on Mapping Cross-Border Financial Linkages—takes another look at the recent global crisis in the context of a broader review of past systemic crises to (i) assess whether rising linkages across countries is a source of latent systemic instability and (ii) ascertain whether the global financial safety net (GFSN) is adequate to contain crisis and contagion risks arising from such systemic instability. This paper develops a new methodology to identify systemic crises and reviews associated policy responses from a global, rather than country-level, perspective

May 26, 2011

Framework Administered Account for Selected Fund Activities - African Development Bank Subaccount for Selected Fund Activities

Description: In March 2009, the Fund established a new Framework Administered Account to administer external financial resources for Selected Fund Activities (the "SFA Instrument"). The financing of activities under the terms of the SFA Instrument is implemented through the establishment and operation of a subaccount within the SFA. This paper requests Executive Board approval to establish the African Development Bank (the “AfDB”) Subaccount for Selected Fund Activities (the “Subaccount”) under the terms of the SFA instrument.

May 20, 2011

Statement by the Acting Managing Director on the Work Program of the Executive Board - Executive Board Meeting - May 20, 2011

Description: The global economy is facing complex challenges. The strength and quality of the recovery vary widely across regions, resulting in very different concerns. In most advanced economies, problems include slow and job-poor growth, amidst fiscal and financial vulnerabilities; in most emerging markets, countries must deal with rapid credit growth, large capital inflows, and inflationary pressures; and rising food and fuel prices affect all members, but low-income countries most harshly. Meanwhile, crisis hot spots persist in some regions, and global imbalances show little sign of receding. This landscape makes global policy cooperation as critical as it was at the peak of the crisis. Participants at the recent IMFC and G-20 meetings shared this view, and I am heartened that they reiterated their commitment to policy cooperation.

The Fund’s mandate of promoting cooperation on global economic and financial problems could not be more relevant in this context. But the task is so vast that we must focus our efforts on the key issues facing the membership. In the near and medium terms, I see three priority areas: (i) pursuing growth consistent with macro-financial stability; (ii) reforming the international monetary system; and (iii) respond to the challenges confronting our low-income members in the face of a difficult global environment. One theme cutting across these areas is the need to enhance our surveillance of the global economy to be ahead of the curve.

May 15, 2011

2011 Triennial Surveillance Review - External Report on Interviews with Country Authorities

Description: Report prepared by Jack Boorman, Former Director of the Policy Development and Review Department and Teresa Ter-Minassian, former Director of the Fiscal Affairs Department at the IMF:

This report summarizes the views of a representative sample of country authorities on IMF surveillance.

Notes: This paper represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management.

May 13, 2011

Review of the Fund’s Involvement in the G-20 Mutual Assessment Process

Description: This paper responds to the Board’s call for a review of the Fund’s role in the G-20 Mutual Assessment Process (MAP) after about a year of implementation. The review covers the period from December 2009 to the April 2011 meeting of the G-20 Finance Ministers and Central Bank Governors in Washington. It considers the Fund’s inputs against the background of the evolving MAP and discusses expectations for this work going forward. The paper does not review the G-20 MAP itself. The implications of broader G-20 Fund cooperation for the Fund’s own surveillance will be discussed in the forthcoming TSR.

May 11, 2011

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) - Review of the Effectiveness of the Program

Description: The Fund’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) program has significantly contributed to the international community’s response to money laundering and the financing of terrorism. This paper reviews how the Fund’s AML/CFT program has evolved during the past five years and discusses how the Fund could move forward in this area.

The past five years have witnessed significant changes to the Fund’s AML/CFT technical assistance program. It is now being delivered more strategically than in the past and is almost exclusively funded by external resources. Its central pillar is now the AML/CFT Topical Trust Fund.

May 3, 2011

Poverty Reduction and Growth Trust - Borrowing Agreement with the Bank of Italy

Description: On April 18, 2011, the Fund, as Trustee of the Poverty Reduction and Growth Trust (PRGT), entered into a borrowing agreement (the “Agreement”) with the Bank of Italy, by which Italy will provide new loan resources of up to SDR 800 million (see attachment). With this Agreement, the Fund has concluded eleven new borrowing agreements providing total resources of SDR 8,461 million in the context of the current fund-raising effort, which supports the reform of the Fund’s lending facilities for low-income countries that became effective on January 7, 2010.

April 28, 2011

Preliminary Considerations of Options to Address Excessive Delays in the Completion of Article IV Consultations

Description: This paper aims to engage Directors on how best to promote timely completion of Article IV consultations. Surveillance is mandatory for both the Fund and its members, and members have an obligation to consult with the Fund for this purpose. In this context, it is useful to consider if further steps are warranted to address cases in which members do not consult with the Fund on a timely basis. This paper does not propose Board decisions at this stage. Instead it lays out ideas to elicit Directors’ views. Based on this informal discussion, staff could return later to the Board, if needed for a formal discussion and possible decisions.

April 18, 2011

Managing Sovereign Debt and Debt Markets through a Crisis - Practical Insights and Policy Lessons

Description: The crisis highlighted the importance of debt management in containing debt-related risks and the associated impact on debt markets. The impact of the crisis on debt levels, and the consequent implications for fiscal consolidation, has been the subject of much discussion and analysis. However, there has been relatively less focus on the issue of how that debt should be managed, including how its composition should be structured so as to mitigate key risk exposures, and its implications for debt market functioning. That task proved significantly complex and challenging through the crisis, particularly in advanced economies, with additional dimensions of risk revealed.