Policy Papers
2010
November 15, 2010
The Fund's Role Regarding Cross-Border Capital Flows
Description: Global capital flows have multiplied many times over in recent years, mainly between advanced economies but increasingly also to emerging markets, reflecting the general reduction in regulatory and informational barriers. Thus, with international asset positions now dwarfing output, global portfolio allocations and reallocations have profound effects on the world economy, as demonstrated by recent boombust episodes of both global reach (e.g., the transmission of the 2001 IT shock and the 2008 mortgage market shock from the United States) and regional significance (in Asia, Latin America, and Central and Eastern Europe). Such cycles and reversals in cross-border capital flows should not be surprising, given that these flows - more so than domestic ones - imply crossing informational barriers, currency and macroeconomic risks, and regulatory regimes.
Notes: This paper was the basis for a preliminary discussion by the Board on the topic of the Fund's role in capital flows. In the course of 2011, the Fund will carry out extensive analytical work, taking into account country experiences, to inform policy guidance on capital flows and help countries maximize the benefits from these flows while meeting any associated policy challenges. The Fund will communicate on this work as it progresses.
November 10, 2010
Framework Administered Account for Selected Fund Activities - Managing Natural Resource Wealth Topical Trust Fund Subaccount
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 Managing Natural Resource Wealth (MNRW) Topical Trust Fund (TTF) subaccount (the “Subaccount”) under the terms of the SFA Instrument.
November 10, 2010
Framework Administered Account for Selected Fund Activities -Tax Policy and Administration Topical Trust Fund Subaccount
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 Tax Policy and Administration (TPA) Topical Trust Fund (TTF) subaccount (the “Subaccount”) under the terms of the SFA Instrument.
November 9, 2010
Statement by the Managing Director on the Work Program of the Executive Board - Executive Board Meeting, November 22, 2010
Description: Persistent challenges: The multi-speed nature of the global economic recovery is testing the system, with strains already appearing in the form of large capital inflows to many emerging market countries and exchange rate pressures. At the same time, slow employment growth, high indebtedness, and remaining financial sector fragilities in some countries could yet derail a fragile recovery. Only cooperative approaches will succeed in relieving tensions and building a strong and sustainable recovery, based on a more balanced pattern of global growth.
October 31, 2010
IMF Quota and Governance Reform - Elements of an Agreement
Description: This paper sets out, and seeks to make operational, a core package for the consideration of the Executive Board and, subsequently, the Board of Governors. The reforms would lead to a major overhaul of the Fund’s quotas and governance, strengthening the Fund’s legitimacy and effectiveness. The paper proposes completion of the 14th General Review of Quotas with a doubling of quotas and a major realignment of quota shares among members. It also covers proposals that would lead to a more representative, all-elected Executive Board.
October 26, 2010
Technical Note on Synchronized Approval of Flexible Credit Lines for Multiple Countries
Description: As foreshadowed in the Executive Board Report to the IMFC on the Fund’s Mandate, this technical note sketches the procedures under which synchronized approval of Flexible Credit Line (FCL) arrangements for multiple member countries could be undertaken under the existing FCL Decision and other Fund policies.1 When multiple members face the same shock, synchronized approval of FCL arrangements could strengthen the effectiveness of the response to the common shock and minimize first-mover problems. This technical note neither modifies existing Fund policies, nor establishes a new financing instrument.
October 26, 2010
Review of the Method of Valuation of the SDR
Description:
This paper provides the basis for the quinquennial review of the method of valuation of the SDR, and the financial instruments used to determine the SDR interest rate. Under the governing Board decisions, the new SDR valuation and interest rate baskets would come into effect on January 1, 2011. The review examines developments during the 2005–09 period in the variables relevant to the SDR valuation.
These variables include exchange rates, exports of goods, services and income, and reserve holdings. Data for exports of goods and services show China has become the third largest exporter among Fund members and monetary unions including Fund members. Nonetheless, indicators such as reserves and international banking and debt securities suggest that the currencies in the current SDR basket continue to predominate in international financial transactions, and these currencies also account for the bulk of global foreign exchange turnover. At this time, the Chinese renminbi would not appear to meet the criteria for being determined by the Fund to be a freely usable currency, which is also required for inclusion in the SDR basket.
October 22, 2010
Framework Administered Account for Selected Fund Activities - IMF-Middle East Center for Economics and Finance 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 IMF-Middle East Center for Economics and Finance Subaccount for Selected Fund Activities (the “Subaccount”) under the terms of the SFA Instrument.
October 8, 2010
Cross-Cutting Themes in Employment Experiences During the Crisis
Description:
The human cost of the recent global crisis is reflected in its impact on the labor market. Explaining why economies with similar downturns had very different employment trends can help design policies to reduce such costs and improve labor markets.
This paper analyzes the recent employment experiences of six economies: Germany, Korea, Mexico, New Zealand, Spain, and Sweden. These economies represent a wide range of labor market institutions, policy responses, and outcomes to the crisis. The divergence of labor market outcomes and of the effectiveness of policies during the crisis can be explained by the interaction between the nature of the shocks and differences in the structure and institutions of each country’s economy.
The worst job losses compared to the drop in output followed permanent shocks, particularly in dual labor markets and in the presence of wage rigidities. Policies to avoid job cuts were much more effective when they were well-targeted and responded to temporary shocks. In contrast, policies to facilitate labor movements were more appropriate following permanent shocks.
October 8, 2010
Provisional Agenda for the Twenty-Second Meeting of the International Monetary and Financial Committee
Description: The following is the provisional agenda for the Twenty-Second Meeting of the International Monetary and Financial Committee, which is to be convened at the Fund’s Headquarters in Washington, D.C. on October 8-9, 2010. A joint working breakfast of IMFC members and G-20 ministers on Next Steps on Quota and Governance Reforms will be held on Friday, October 8 from 8:00 a.m. until 9:30 a.m. in DAR Constitution Hall.