Policy Papers
2010
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.
October 7, 2010
Statement by the Managing Director to the International Monetary and Financial Committee on the Global Economy and Financial Markets
Description: The recovery remains fragile and uneven. In many advanced economies, activity is still sluggish and unemployment high, while legacy problems in the financial system remain unresolved. Activity is more robust in many emerging and developing economies. However, their prospects also depend on a healthy, broad-based recovery among the advanced economies, owing to deep real and financial linkages. The key policy challenge is to effect a smooth transition from public- to private-sector-led growth in many advanced economies, and from external to domestically driven growth in key emerging economies. While short-term macroeconomic policies are broadly appropriate, completing the two rebalancing acts will require tackling the medium-term fiscal, financial, and structural challenges raised by the crisis. Without such reforms, growth could sputter, with grave economic and social consequences.
October 7, 2010
Progress Report on the Activities of the Independent Evaluation Office
Description:
Since its last report, the Independent Evaluation Office (IEO) has advanced work on the two current evaluations and selected topics for three new evaluations.
The evaluations of Research at the IMF: Relevance and Utilization and IMF Performance in the Run-up to the Current Financial and Economic Crisis are in the concluding stages. IEO expects to send these evaluations to the Executive Board before year-end.
October 7, 2010
Executive Board Report to the IMFC on Quota and Governance Reforms
Description: Since the IMFC last met in April, the Executive Board has taken up the full range of quota and other governance reforms. While there has been some movement on the many complex issues, discussions have been inconclusive, and no proposal has been able to command broad support. The concluding remarks that sum up these meetings lay out the various positions taken by members of the Board (attached). The debate is continuing, and we hope to make progress on finding the possible elements of a compromise acceptable to the membership.
October 6, 2010
Statement by the Managing Director to the International Monetary and Financial Committee on the Fund’s Policy Agenda
Description: Although the global recovery continues to move ahead, it remains fragile and uneven, with continued high unemployment. Many countries are emerging from the crisis with high debt burdens, low growth, and still fragile financial sectors. At the same time, economic activity in many emerging market countries has picked up, attracting large capital inflows that challenge economic policy. Important steps have been taken to make financial sectors safer around the world, but the unfinished agenda is still substantial, particularly for cross-border finance and macro-prudential regulation. All this suggests serious vulnerabilities and challenges remain, requiring continued policy cooperation and collaboration.
October 6, 2010
Guidance Note for Staff on Undertaking Targeted (Risk-Based) Reports on the Observance of Standards and Codes (ROSCs) in Financial Regulation and Supervision
Description: In September 2009, the International Monetary Fund (IMF) and the World Bank (WB) Boards approved changes to the Financial Sector Assessment Program (FSAP) to (i) make it more flexible and better-aligned with country needs as well as IMF and WB financial sector priorities and core responsibilities; (ii) enhance the quality, candor, and comparability of assessments; and (iii) better-integrate FSAP analysis into the institutions’ evolving mandates.