After a decade of super easy monetary policy in the G-3 countries, our data show that an EM positioning overhang may have built up, with successive dovish Fed shifts becoming less and less EM positive. Setting aside China, this latest rebound in flows to EM looks weak, with only Indonesia and Mexico seeing meaningful Q1 inflows.
The IIF has responded to the initial consultation of the FSB on the effects of financial regulatory reforms on SME financing.
In a letter to the European Commission’s Technical Expert Group on Sustainable Finance, the IIF sets out six principles regarding the need for a sustainable finance taxonomy that can be practical, internationally-applicable, and readily adapted to the needs of users in different jurisdictions.
Non-resident capital flows to MENAP are projected to rise slightly to $215 billion in 2019. Strong fundamentals in key countries, including large financial buffers and low debt, should support flows. Sovereign bond issuance will remain the main source of non-resident capital inflows.
Stretching out policy support; U.S. banks build up holdings of domestic government debt—potential liquidity risk?; Higher U.S. budget deficits will keep net borrowing needs at high levels; Less foreign demand for Treasuries—though domestic demand has remained solid
The Financial Stability Board (FSB) published its report FinTech and market structure in financial services: Market developments and potential financial stability implications on February 14, and the IIF is pleased to provide some comments.
We have unveiled a new database on EM real money positioning. We begin to add bank-intermediated flows to our database, which comove with real money flows in Turkey and Argentina. The EM positioning overhang may be greater than initially assumed.
The March 2019 IIF Global Regulatory Update provides updates on the Financial Stability Board, current work streams in Regulatory Capital, Recovery and Resolution, Cyber Security, Digital Finance, Sustainable Finance, Insurance and upcoming events.
Venezuela’s GDP decline is nearly unprecedented, as is the collapse of oil output, its main export. The initial impact of US sanctions was manageable, but history suggests they will have severe effects. Recoveries from oil output collapses tend to be fast, making higher oil revenue feasible if policies change.
This paper proposes some alternate ways of achieving the desired public policy goals, within a framework of international cooperation that facilitates data flows across borders.
Since submitting the industry response letter for consultation the Discussion Paper (DP): “Financial resources to support CCP equity in resolution", the industry working group has also developed an Incentives Analysis of recovery and resolution tools.
The industry comment letter was submitted to the BCBS on March 14.
Eking out the late-cycle rally; Sustained improvement in external funding conditions would be a boon for highly indebted EMs; After debt relief, many low-income countries have seen debt/GDP ratios rise sharply in recent years; Rising pension obligations burden mature economies—and some emerging markets as well
The February/March edition of the Insurance Update provides targeted updates on IIF insurance activities and events, and highlights relevant IIF publications or related regulatory developments in other fields.
Trade tensions raised fears of slowing global trade. We develop a model to track US trade in real time, based on detailed weekly customs information. The picture is more positive than in Asian data, as US trade stabilized in real terms in early 2019. We think that global trade fears are overblown.
EM Growth Tracker at 2.8% 3m/3m sa ar in February. Strong improvements in financial variables insufficient to halt decline. Trade volumes and industrial production still weakening. EM Asia and Latam weaken, EM Europe & Africa with marginal gains.
Declining equity risk premia mirror the Fed’s dovish turn in 2019—but how much further can risk-on run?; Angels falling: more U.S. issuers are at the lower end of investment grade (BBB)—and taking on more debt; More vulnerable: small unrated U.S. non-financial corporates have racked up a hefty $1.13 trillion in debt; To call or not to call: $110 billion in CoCos are redeemable through 2020