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IMF Studies Changes to Bond Restructurings

By Robin Harding and Robin Wigglesworth
Published May 22, 2013 Financial Times

The International Monetary Fund is studying changes to how it handles sovereign debt restructurings after a turbulent period that has rattled the balance of power between governments and their creditors.

According to international officials familiar with the IMF’s deliberations, the Fund is primarily concerned with countries delaying necessary restructurings and the difficulties involved in corralling bondholders into agreements.

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IMF Slams Naked CDS Ban in Europe

By Louise Bowman
Published April 16, 2013 Euromoney

The IMF has released a damning report criticizing the European ban on purchases of naked sovereign CDS (SCDS). It not only questions the fundamental premise that CDS trading contributes to market volatility but asserts that even if it does there are more effective ways to mitigate this. “Whether SCDS markets propagate contagion is difficult to assess since the risks embedded in SCDS cannot be readily isolated from those in the financial system,” the report concludes. “However, SCDS markets do not appear to be more prone to high volatility than other financial markets. While there are some signs that SCDS overshoot their predicted value for vulnerable European countries during periods of stress, there is little evidence overall that such excessive increases in countries’ SCDS spreads cause higher sovereign funding costs.”

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EU Ban on Naked Sovereign Credit Default Swaps Unnecessary - IMF

By Daniel Bases
Published April 11, 2013 Reuters UK

The International Monetary fund said the European Union was moving in the wrong direction by banning the use of a hedging strategy related to sovereign credit default swaps.

In a report published on Thursday ahead of its annual meeting April 19-21, the IMF said the ban on so-called naked SCDS is not supported by any empirical evidence and could in fact lead to more instability in the financial markets.

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IMF Says Benefits of Financial Reform Outweigh Costs

By Alexandra Alper
Published September 11, 2012 Reuters

Tough new global financial rules will nudge up credit costs, but the slight drag they will place on major economies is worth it to achieve a more stable financial system, the International Monetary Fund said on Tuesday.

In a study examining the impact of global financial reform in Europe, Japan and the United States on credit pricing, the IMF concluded that average bank lending rates will rise 26 basis points in the United States, 17 basis points in Europe and 8 basis points in Japan over the long term in response to rising regulatory costs. A basis point is one hundredth of a percentage point

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Awash in Money and Piles of Debt

By Stella Dawson
April 23, 2012 Reuters

The amount of money thrown at rescuing the world economy since the Great Recession began is truly staggering, probably more than $14 trillion, and the financial spigots are still open.

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OTC Shift Poses Liquidity Risk

By Shanny Basar
Published April 11 2012 Financial News

The International Monetary Fund has put the increased cost of collateral that will come from moving over-the-counter derivate trades through clearing houses at between $100bn and $200bn, considerably lower than other estimations. But the body still believes this could hit liquidity in the market for safe-haven assets.

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Dallara Says Debt Swap Is on Track

By Alkman Granitsas
Published March 04 2012 Wall Street Journal

The organizers of Greece's proposed debt-restructuring plan have moved to offset doubts about whether enough banks will voluntarily agree on March 8 to a loss-making debt swap to keep the country out of default.

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G20 Turns Up Pressure on Germany

By Robin Harding, Adam Thomson, Peter Spiegel
Published February 26 2012 Financial Times

Finance ministers from the world’s largest economies ratcheted up the pressure on Germany to increase the size of the eurozone’s €500bn rescue fund, saying the move would be “essential” to a decision by non-European countries to raise more resources for the International Monetary Fund.

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As Cash Runs Out, Greece Teeters

By Carl B. Weinberg
Published November 5 2011 Barron's

Greece is on the way to default, sooner or later. Even Prime Minister George Papandreou's vow on Friday to step down and form a coalition government won't be able to stave it off. The dam burst early last week, days before the government won a parliamentary vote of confidence on Friday.

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The Problems With Derivatives Clearing

By Stephen J. Lubben
Published: April 5 2011 NYTimes

The International Monetary Fund is out with a new paper on derivatives after the storm, and it is a strangely academic exercise for an institution that one would hope would be a bit practical. In short, the paper argues that the focus in the Dodd-Frank Act on central clearing of derivatives is not the best solution and that central clearing parties are apt to become “too big to fail.”

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