Global Financial Stability Report Press Conference - 2016 IMF Annual Meetings
October 5, 2016
Peter Dattels, Deputy Director, Monetary and Capital Markets Department
Matthew Jones, Chief of the Global Markets Analysis Division, Monetary and Capital Markets Department;
Ali Al-Eyd, Deputy Chief, Global Markets Analysis Division,
Monetary and Capital Markets
Andreas Adriano, Senior Press Officer, Communications Department
MR. ADRIANO: Good morning, and welcome to this press conference of the fall 2016 edition of the Global Financial Stability Report. With us today, are Peter Dattels, Deputy Director of the Monetary and Capital Markets; Matthew Jones, assistant director and head of the global markets analysis division; and Ali Al-Eyd, deputy chief in the same division, they are the main authors of the report. Mr. Dattels will have some opening remarks and we are then happy to take your questions. We need to finish on time, because there is another press conference coming after that, which is the Fiscal Monitor. Mr. Dattels, the floor is yours.
MR. DATTELS: Thank you everybody for being here this morning. Today, we find ourselves in a low-growth, low-rate, era characterized by increased political and policy uncertainty. This is creating many challenges for banks, policymakers, and corporates, in all parts of the world. Failure to adapt to this new era could undermine the health of financial institutions and add to the pressures of financial and economic stagnation. This report analyzes these challenges and offers solutions to foster stability in this new era. Let me start with our assessment of risks.
First, some good news. Short‑term risks have declined. Six months ago we worried about Brexit and possible global repercussions. The shock of Brexit was well absorbed by markets, helped by central bank contingency plans, and monetary policy easing by the Bank of England. The impact appears more local than global. We were worried about high levels of corporate debt in emerging markets and rising risk of default. As some of the worst-hit emerging markets showed signs of recovery, and against the backdrop of further monetary easing, emerging market assets have rebounded strongly. The passing of these near‑term risks has led to a fall in volatility and a rise in equity prices in advanced economies.
But medium‑term risks are building, because we're entering a new era of challenges. Low, uneven, and unequal growth is opening the door to more populist and inward looking policies, leading to a loss of political cohesion and a rise in policy uncertainty in some countries. This could increase volatility and undermine growth.
