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Tue 6 Nov 2018 / Europe

Country risk from credit derivatives

Countries swapping their foreign currency debt back into their own currency or their domestic debt are as much at risk from credit derivatives as investment banks were 10 years ago. If one counterparty defaults, this could be a huge cost to the other. Most market participants agree to pay some form of collateral when the value of the swap moves one way or another. However, most countries cannot post collateral.

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Tue 30 Oct 2018 / Europe

Ukraine's thorny IMF relationship

The IMF's relationship with Ukraine has always been among its most high profile and difficult interactions. The US and Europe have consistently encouraged the IMF to remain engaged in Ukraine, viewing this as a means of laying a foundation for greater market orientation, integrating Ukraine with the West and diminishing Russia's regional influence. Though the Fund has spared no effort, the relationship cannot be viewed as a success, and the economic promise of the 2014 revolution is not yet close to fruition.

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Fri 26 Oct 2018 / Europe

No-deal Brexit threat to rich EU nations

When examining the potential fallout from the two greatest risks facing European markets, a no-deal UK exit from the European Union and possible Italian contagion, the impact on EU supply chains and cross-border banking exposures is especially important to consider. The EU regions that would be most impacted by a no-deal Brexit are richer and have lower unemployment rates, including southern Germany and the Netherlands. Such regions stand in contrast to Italy and Spain, which are less exposed to the UK through supply chains.

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Tue 9 Oct 2018 / Europe

Euro will not survive if Italy fails

An Italian debt default would trigger a European banking crisis with global economic and financial market ramifications. Italy is the euro area's third largest economy. If it fails, the single currency cannot survive. It is also too costly for its European partners to save. However, the country's new populist government is engaging in wishful thinking that somehow the country will grow its way out of its debt problem. Its policies show complete disregard for euro area budget rules and are bound to deal the economy a serious blow.

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Mon 8 Oct 2018 / Europe

Five proposals for post-programme Greece

After eight years of hardship, Greece is finally emerging with renewed optimism from this difficult time. Although the international economic environment is relatively volatile at the moment, I have long believed that the Greek case is manageable for an exit from the memorandums of understanding in late August without a precautionary credit line. Policy-makers must focus on conditions for Greece to achieve a sustainable return to capital markets. My five proposals include setting up a new advisory task force to regain the investment grade held in 2008.

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Thu 4 Oct 2018 / Latin America Caribbean

Argentina and the IMF – Take Two

Amid a plunging peso and falling confidence in Argentine economic policy, President Mauricio Macri turned to the International Monetary Fund for the second time in three months. His government is working with the Fund to implement a viable programme, owned by Argentina. With a revised framework at hand, some commentators have advanced criticisms of Argentina and the IMF, which I highlight below. They miss the bigger picture. Argentina's revised IMF programme merits the support of the international community.

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Tue 2 Oct 2018 / Global

Central banks face 'hot breath' over QE

Political constraints on the US Federal Reserve and the European Central Bank restarting large-scale asset purchases to combat a future recession will be much greater than after the 2008 financial crisis. Interest rates are unlikely to rise high enough during the current tightening cycle to quell any downturn simply with rate cuts. Experts recognise that QE will be part of central banks' toolkit for dealing with the next dip. With the 'hot breath' of politicians 'on central bankers' shoulders', leeway for purely technocratic solutions is constrained.

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Thu 27 Sep 2018 / Global

IMF adapts and underpins legitimacy

The two decades since the Asia financial crisis have not been easy for the International Monetary Fund. It grappled with the rise of China and emerging markets, and the 2008 financial crisis. Then it faced Europe's crisis, including the Greek saga. During this tough period, the IMF has adapted its economic thinking, underpinned its legitimacy and repaired relations with Asia. Operationally, the Fund overhauled its work. The last two decades saw it shift from an organisation shrouded in secrecy to one basking in sunlight.

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Wed 26 Sep 2018 / Global

Past, present and future of the IMF

This year's International Monetary Fund-World Bank Group annual meetings will take place in Bali, Indonesia, two decades following the Asia financial crisis and in one of the countries that posed great challenges for the IMF at the time. In this three-part series, I will examine the difficulties faced by the Fund then, how it has evolved, and the trials ahead. The IMF has demonstrated its relevance to a new generation of global public policy officials, but will need to stay alert to modernise and cope with new and critical looming challenges.

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Thu 20 Sep 2018 / Global

A regulatory approach to fintech

On the one hand, regulators must protect consumers and investors against fraud and combat tax evasion, money laundering and the financing of terrorism. They must also protect the integrity and stability of the financial system. On the other, they must beware of stifling innovation that benefits the public. By engaging with market participants at the centre of financial innovation, regulators can stay abreast of the benefits of new technologies. Developing a forward-looking regulatory framework calls for flexibility and new expertise.

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