Friday, 20 February 2015
Over-the-counter (OTC) derivatives played an important role in the buildup of systemic risk in financial markets before 2007 and in spreading volatility throughout global financial markets during the crisis. In recognition of the financial and economic benefits of derivatives products, the G20 moved to regulate the use of OTC derivatives. Attention has been drawn to the detrimental effects of the United States and the European Union to coordinate OTC reform, but this overlooks an important aspect of the post-crisis process: the exemption of non-financial operators from OTC derivative regulatory requirements.
Friday, 20 February 2015
If there’s a reversal of privatization, why? There are several reasons for a country to renationalize or stop privatization. In some cases, following the prescriptions of the IMF and the World Bank, developing countries privatized industries that were under state control and opened their borders to foreign direct investment.
Tuesday, 10 February 2015
In our previous posts we talked about how it has become common wisdom that neoliberalist transformations are taking developing countries by storm – irreversibly changing intra-state dynamics, boosting productive capacities, reducing inequality, and enhancing welfare. Instead, recent years have seen a pattern of an increase in state activity in the domestic economy. In some cases, there’s privatization and in others a populist surge of sentiment in favour of greater government involvement in the economy.
Wednesday, 4 February 2015
Since the 1970s, neoliberalism or the Washington Consensus belief in the virtues of free markets offered us a tantalizing premise: that the accumulation regime of neoliberalism has provided consumers with more for less. The engine of economic growth was no longer the state, but the individual. It was the role of the entrepreneur and consumer, not the government that could produce economic wealth for a society. This was matched with cheap energy, food, raw materials, and labour, otherwise known as the cornerstones of the capitalist bloom, and instrumental inputs into the laissez-faire golden age.
Tuesday, 3 February 2015
The Bank of Canada is among the least transparent major central banks in the world. I made this point in my weekly column for the Globe and Mail late last year. Thanks to former Federal Reserve governor Kevin Warsh's work for Mark Carney, there suddenly was empirical evidence to support an argument that I had until then based mostly on impressions, such as the relatively cloistered nature of the Bank of Canada's Governing Council. I couldn't let the moment pass undocumented. It helped that it was the slow holiday period, where editors are so desperate they will accept most anything, even several hundred words on central bank transparency.
Thursday, 29 January 2015
That was the name of a panel discussion last Friday afternoon moderated by IMF Chief Economist Olivier Blanchard. The timing of the panel discussion was propitious, coming just before the Greek elections that saw the Syriza party come to poet on a debt-reduction platform. International cooperation will be needed in the months ahead as uncertainty over the outcome of debt negotiations and the fate of the euro zone is likely to increase.
Wednesday, 28 January 2015
Drawing on CIGI-sponsored research, this policy brief discusses the potential effects of unexpected US news events on global capital flows. It then identifies the countries that are most vulnerable to global financial volatility and discusses the role of the Group of Twenty in facilitating a stronger and more resilient global economy.
Sunday, 25 January 2015
As expected, the ECB has embraced Quantitative Easing (QE) in an effort to prevent outright deflation in the euro zone. The measures announced last week are bigger than most analysts expected, with the Bank committing to purchase €60 billion of bonds per month through 2016.
Friday, 23 January 2015
In the past few days we have seen a number of signs of this obstacle: the IMF has reduced its forecast for global growth, growing concerns of currency wars, with both unexpected and long overdue policy decisions by central banks, and the prospects of debt restructuring have spread from Greece to Ukraine and Venezuela.
Wednesday, 21 January 2015
The story is now well known. As central banks around the world began to converge on similar monetary policy strategies there was little thought given to the possibility that the twin goals of price stability and financial stability would come into conflict with each other. The global financial crisis of 2008-2009 changed attitudes and reminded policy makers that it is not straightforward to manage macro- and microprudential concerns simultaneously. Central bank governors began to underscore the importance of communication even before the GFC, but this event complicated central bank communication in several respects.