Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Assessing Systemic Financial Stability Risks Due to FX Mismatches

March 30, 2022

Preview Citation

Format: Chicago

Review of The Institutional View on The Liberalization and Management of Capital Flows — Background Note on Assessing Systemic Financial Stability Risks Due to FX Mismatches, (USA: International Monetary Fund, 2022) accessed December 26, 2024

Summary

This note outlines the approach of the proposed revision to the Institutional View (IV) when assessing whether systemic financial stability risks are elevated due to foreign currency (FX) mismatches. The approach builds on the staff guidance regarding risk assessments in bilateral surveillance, while allowing for flexibility to draw on future advances in best practice. This note proposes a two-step approach to assess systemic risks from FX mismatches. This note is organized as follows. Section II outlines the sources of systemic risks stemming from FX debt and potential amplification channels. Section III outlines the risk assessment approach in practice and Section IV concludes.

Subject: Currencies, Financial sector policy and analysis, Financial statements, Foreign exchange, Monetary policy, Money, Political economy, Public financial management (PFM), Systemic risk, Systemic risk assessment

Keywords: Background note 2, Currencies, Financial statements, FX balance sheet mismatch, FX debt, FX liquidity risk, FX mismatch, Global, I. assessment, Systemic risk, Systemic risk assessment

Publication Details

Pages:

18
Volume:

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DOI:

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Issue:

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Series:

Policy Paper No. 2022/010
Stock No:

PPEA2022010
ISBN:

9798400206016
ISSN:

2663-3493

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