Key Issues

April 2014 Capital Markets Monitor and Teleconference

Credit Gaps and the Cheapening of Credit

April 9, 2014 — As we move into the sixth year of recovery in mature market economies, supported mainly by extraordinary monetary accommodation, it is important to ask where we are in the credit cycle. Or more precisely, where is the credit gap? This can help us gauge the potential duration of the economic expansion as well as possible implications for financial stability given plentiful liquidity.

In a related development, plentiful liquidity may have contributed to a “cheapening” of credit—the implications of which are yet to be fully understood. Increasing issuance by lower quality borrowers has added to “fallen angels” to cause a noticeable deterioration of credit quality—as measured by credit ratings—of outstanding sovereign and corporate debt over the past decade.

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IIF CEO Adams at Fifth IMF Fiscal Forum: Managing the Transition to Normality—Implications for Fiscal Policy

April 8, 2014 — Speaking at a high level roundtable at the Fifth IMF Fiscal Forum—an annual meeting of senior officials from ministries of finance from the major economies in the world—IIF President and CEO Tim Adams discussed the fiscal policy challenges and priorities as the global economy transitions to “normality.” Panelists discussed the near-term challenges as monetary policy normalizes and assess the scope for fiscal policy to promote higher, equitable, and more inclusive growth in a challenging global environment.

IIF CEO Adams: Ukraine shows urgency of passing IMF reform

In an Op-Ed in the The Hill and an interview with CNBC, IIF President and CEO Tim Adams urges the U.S. Congress to enact the IMF funding and governance reforms agreed to by the G20 in 2010.

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IIF’s New Capital Flows Tracker Sees Pick-up in Portfolio Flows to Emerging Markets


March 26, 2014 — The Institute of International Finance today released new estimates for portfolio flows to emerging markets for March 2014 suggesting that portfolio inflows rebounded in the last two months, following emerging market stress in early 2014. IIF estimates emerging markets received $39 billion in portfolio inflows in March, up from $25 billion in February and $5 billion in January.

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April 2014 Global Economic ChartbookMember only content

The April edition of the IIF Global Economic Chartbook summarizes our current views on the global economy, including a section on downside risks. It also focuses on our latest assessment of capital flows to emerging economies as well as the structural challenges for many EMs. The underlying data for the charts presented are available for download in PowerPoint format—you are encouraged to use the charts and data in your own work.

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THE CLEARING HOUSE -- Oliver Wyman: Do Bond Spreads Show Evidence of Too Big To Fail Effects?

April 10, 2014 — A study conducted by Oliver Wyman finds clear evidence that by 2013 any funding cost differences among banks that existed in prior years have disappeared, and that any remaining differences could be due to factors other than TBTF perceptions. These findings strongly suggest that recent regulatory reforms have dramatically changed market perceptions of risk and funding costs today.

Read more (theclearinghouse.org)

IIF Offers Constructive Comments to FSB on Non-Bank Non-Insurer GSIFIs Identification Methodology

April 7, 2014 — The Institute of International Finance today submitted its response to the Financial Stability Board’s proposed assessment methodologies for identifying non-bank non-insurer (NBNI) global systemically important financial institutions. “How to properly identify and address systemic risk remains international regulators’ primary focus,” said Tim Adams, president and CEO of IIF. “We appreciate the work the FSB has done in this space, and we reiterate our support of the FSB’s focus on activities and not entities.”

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April 2014 Global Economic Monitor and Teleconference


April 2, 2014 — The global economy continues to be affected by bumps in the road that together are contributing to softer growth in the first half of the year. We have marked down our global GDP forecast slightly, but we have not shifted our basic assessment that activity should gather pace as the year proceeds. The major mature economies experienced a volatile first quarter, partly related to weather conditions. China had a disappointing first quarter, but additional policy support should boost growth during the year to meet the annual target. Emerging economies outside China are being affected by the cross currents from these developments. The evolving situation in Ukraine provides an important geopolitical risk to the outlook, notwithstanding the sanguine reaction of risk assets so far.

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Events

2014 IIF Executive Program on Treasury Risk

April 28-30, 2014

London, United Kingdom

This three-day program starts with a broad overview of risk management as applied to treasury operations against the backdrop of current macroeconomic and regulatory developments in the industry. Then leading financial institutions will share the latest sound practices to arm participants with key insights in fund transfer pricing, capital management, and liquidity risk management.

2014 MENA Chief Risk Officer Forum

May 7-8, 2014

Dubai, United Arab Emirates

Hosted by National Bank of Fujairah, the forum provides members with the opportunity to identify and discuss key risk management issues of relevance to banks in the region, analyze regional and global regulatory trends, share knowledge and expertise on risk management issues, and to conduct a regional dialogue with banking regulators.

2014 Annual Meeting of Central and Eastern European Bank Chief Executives

May 15, 2014

Warsaw, Poland

Sponsored by PKO Bank Polski, this program will focus on the impact of recent economic and regulatory developments as well as the evolving landscape for the Euro Area banking sector and financial markets.

2014 China Economic Forum

May 19-20, 2014

Shanghai, China

The Third Plenum sets out an impressively broad albeit ambitious roadmap for reform in China over the next decade aimed at the transformation to a market-oriented economy for sustained and more balanced growth. Hosted by Bank of Communications, the China Economic Forum will feature a lively exchange of ideas and views with policymakers, senior officials and market participants to assess reforms, implementation plans and economic prospects.

2014 Asia/Pacific Chief Risk Officers Forum

May 21-22, 2014

Tokyo, Japan

Hosted by Mitsubishi UFJ Financial Group, the forum seeks to facilitate members’ efforts to continue strengthening risk management capabilities and to develop pragmatic approaches to implementing new regulatory developments in the Asia Pacific region.

2014 IIF Spring Membership Meeting

June 4-6, 2014

London

Join us at the 2014 IIF Spring Membership Meeting which will be attended by an influential audience of the world’s leading bankers, investors, insurers, and policymakers.

2014 IIF Executive Program on Country/Sovereign Risk Management & Crisis Resolution

June 10-12, 2014

London, United Kingdom

This three-day program starts with an overview presentation of the broad picture of the dimensions of country/sovereign risk, the interactions interconnectedness among the various economic actors, and the channels through which vulnerabilities and financial crises in one sector of an economy can spread to other sectors or even across countries giving rise to negative feedback loops.

2014 IIF Executive Program on Insurance Capital and Risk Management

June 24-27, 2014

Zurich, Switzerland

This three-day executive program, offered in cooperation with Swiss Re, will succinctly cover the assessment and management of insurance capital and risks. An overview of the macroeconomic and regulatory environment for re/insurance companies will set the stage for more targeted sessions on Enterprise Risk Management, Risk Modelling, Economic-based Valuation, Capital Management and Insurance Regulation. Experts will provide hands-on experience in the analysis of both the broader macro-economic and regulatory issues, as well as the technical aspects of insurance capital and risk management.