Top 25 Financial Sectors to Get Mandatory IMF Check-Up
The landmark decision by the IMF’s Executive Board on September 21 converts the financial stability component of the voluntary Financial Sector Assessment Program (FSAP) into a mandatory part of the IMF’s surveillance for the world’s top 25 financial sectors.
The global economic crisis laid bare the devastating economic consequences a financial crisis in one country can have on the global economy. This decision is a concrete step toward strengthening the IMF’s surveillance of those members whose financial sectors could have the biggest potential impact on global stability. It is one of the key steps taken by the Fund to modernize its surveillance mandate and modalities in light of the recent crisis, and is consistent with the commitment made by the leaders of the Group of 20 advanced and emerging economies at the Washington Summit in November 2008 to subject their financial sectors to greater scrutiny.
The IMF chose the 25 economies (see box) based on the size of their financial sectors and their connections with financial sectors in other countries. The IMF criteria do not reflect a country’s broader economic or political importance, and would be periodically reevaluated as financials sectors develop and their size and connections change over time.
Australia
Austria
Belgium
Brazil
Canada
China
France
Germany
Hong Kong SAR
India
Ireland
Italy
Japan
Luxembourg
Mexico
Netherlands
Russia
Singapore
South Korea
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States
Casting a wider net on financial stability issues
All of the IMF’s 187 member countries are already required to undergo an annual economic health check-up, known as an Article IV consultation. In addition, the FSAP offers the opportunity to all member countries to undergo, on a voluntary basis, a comprehensive financial sector assessment. More than three-quarters of the Fund’s membership have so far volunteered for FSAPs. All FSAPs include an in-depth assessment of financial stability done by the Fund. In addition, in developing and emerging market countries, FSAPs include an evaluation of developmental and structural aspects of the financial sector conducted by the World Bank.
• Financial stability assessments examine the soundness of the...
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