The recent IMF assessment of Europe’s financial sector found that much has been achieved to address the recent financial crisis in Europe, but vulnerabilities remain, and intensified efforts are needed across a wide front, one of which being bank balance sheet repair. This column looks at progress with bank restructuring in Europe.
Quality, clear communication is a very powerful tool for central banks because it influences expectations. This column presents new research on central-bank communications, using a formal measure of clarity – the ‘Flesch-Kincaid grade level’. The picture is varied: there are significant and persistent differences in clarity over time and across countries. However – and worryingly – the financial crisis is associated with unclear communication for some central banks.
Asia’s trade-policy landscape is set to change with the start of negotiations on a Regional Comprehensive Economic Partnership involving ASEAN and major regional economies. This column argues that such a deal could bring economic benefits, but that realising them depends on tackling several challenges during the negotiations and afterwards.
Since 2008, we have learned that the root causes of global economic instability are more than the sum of domestic instabilities. This column calls for a broad reconsideration of the principles underpinning current global economic governance; arguing that in a globalised world, isolated domestic economic policymaking is not enough. The international community needs to adhere to a ‘Good Global Citizen’ remit – housed by the IMF – if we are to tackle global economic policy under collective responsibility.
Inflation targeting once seemed sufficient, but the Global Crisis showed that maintaining financial stability and price stability requires more than the monetary-policy tool. We are witnessing the rise of macroprudential policy. This column discusses how monetary and macroprudential policies interact and what it means for policy and institutional design. Regardless of whether both policies are assigned to the same authority or to two authorities; separate decision-making, accountability and communication structures are required.
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