What Policies Could Normalize Markets?

José Viñals, Financial Counselor and Director of the Monetary and Capital Markets Department at the IMF
Douglas Elliott, Partner at Oliver Wyman

May 3, 2016

Risks to global financial stability have risen over the last six months, according to the latest release of the International Monetary Fund (IMF) Global Financial Stability Report. The report, a semi-annual publication overseen by José Viñals, has become "a benchmark publication and one that anyone interested in analysis of global financial markets has to read," according to John Lipsky, senior fellow at the Foreign Policy Institute.

During the May 3 event Viñals touched upon significant and worrisome trends in the global economy. In particular that global GDP has seen some recovery, but has still not reached the robust levels of the pre-financial crisis era. Viñals also noted that corporate earnings per share in advanced economies have been on the decline, emerging markets have had increasing debt levels, and concerns have been raised over these economies not earning enough to continue making interest payments.

Douglas Elliott of international management consulting firm Oliver Wyman shared concerns over the prolonged expansionary monetary policies around the world and the impact on frivolous risk taking within financial sectors. Viñals and Elliott offered some suggestions for improvement, using the example of the Banking Union in Europe as a step in the right direction. They also pointed out that monetary policies still have influence and their benefits still outweigh the costs, but that these policies must be coupled with structural reforms to maximize benefits.

Video available at https://www.youtube.com/user/SAISevents/videos.