April 1, 2014 — This month’s IIF Global Regulatory Update provides updates on current work streams in regulatory capital, recovery and resolution, data requirements, accounting and disclosure, insurance, and supervision, as well as upcoming events.
March 27, 2014 — Chinese bank assets have grown more than five-fold over the last decade, dwarfing the 40-50% increase in U.S., Euro Area and Japanese bank assets. This strong growth in Chinese bank balance sheets reflects not only domestic lending, but a notable expansion in Chinese banks’ lending to companies active and/or domiciled overseas. Chinese activity in international syndicated loan markets has almost doubled since 2011, and the customer base for Chinese banks overseas includes a growing number of major international firms in both mature and emerging markets. Increased activity by Chinese banks abroad helps facilitate the rising use of the renminbi (RMB) in international transactions.
March 26, 2014 — The Institute of International Finance today released new estimates for portfolio flows to emerging markets for March 2014 suggesting that portfolio inflows rebounded in the last two months, following emerging market stress in early 2014. IIF estimates emerging markets received $39 billion in portfolio inflows in March, up from $25 billion in February and $5 billion in January.
March 20, 2014 — Dorothy’s famous line from the Wizard of Oz captures in a nutshell the new global conditions in which Latin America finds itself: “We’re not in Kansas anymore.” The familiar, easy times of rapid economic growth underpinned by abundant foreign capital and continuously rising commodity prices have come to an end. We expect regional real GDP growth to weaken to 2.1% this year from 2.4% in 2013 due to a slowdown in Brazil and stagflation in Argentina and Venezuela.
March 25, 2014 — The undersigned financial services trade associations, based in the US and Europe, today issued the following statement in support of a Transatlantic Trade and Investment Partnership (TTIP) that includes financial services regulatory coordination, in advance of the March 26 EU-US Summit attended by US President Barack Obama, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso:
The escalating standoff over Crimea has further exacerbated Ukraine’s already acute financial and economic crisis, and sharply increased downside risks across Emerging Europe. A major adjustment supported by large-scale official financing is needed to avert a collapse in Ukraine. Crimea secession will deepen the recession in Ukraine and have significant but still sizable adverse impact on the rest of the region. However, should the conflict spread to the Eastern and Southeastern regions, the fallout would be nearly catastrophic for Ukraine. Russia would suffer a major recession, too, with the rest of Emerging Europe likely to be strongly affected due to its high dependence on energy supplies via Ukraine.
As the global economic recovery moves to its fifth year, certain of its features could interact to form strong headwinds to sustained growth—in addition to political turmoil in “hot spots” around the world. Despite extraordinary monetary measures, including tremendous liquidity provision, the recovery has been lackluster. For example, the U.S. recovery has averaged 2.3% growth p.a. in the four years following the 2009 trough year—less than half the growth seen during a typical recovery during comparable past periods. Partly as a result, inflation remains low in the mature economies. In particular, both current and expected inflation are firmly below 1% in the Euro Area.
The combination of sharply higher levels of debt, low inflation—which makes the debt burden more onerous for borrowers—and an eventual rise in interest rates following Fed tapering coupled with investor withdrawal from bond funds could call into question the ability of some (if not many) borrowers, to service and roll over their debt.
March 12, 2014 — IIF today announced that it will soon open an office in Dubai in recognition of the region’s growing stature in the global financial system and to better serve its members. In addition, it announced that Wolfgang Engel will become IIF’s Chief Representative for the office. Engel currently serves as Director of Global Membership for IIF in Washington.