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Business and Economics > Money and Monetary Policy

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Cover Technical Notes and Manuals
BigTech in Financial Services: Emerging Regulatory Considerations
Parma Bains
,
Gabriela E Conde
,
Nobuyasu Sugimoto
, and
Caroline Wu
Large technology firms (BigTech) are increasingly expanding into consumer-facing financial services, particularly payments, credit, insurance, asset management, and financial SuperApps. While their current financial stability implications remain limited in most jurisdictions, rapid growth, especially in emerging market and developing economies, raises new conduct, prudential, and systemic risks. This paper analyzes BigTech business models, key activities, and associated risks, and assesses the adequacy of existing regulatory frameworks. It discusses practical options for supervisors to enhance risk identification, strengthen sector-based and group-wide supervision, expand the regulatory perimeter, improve data protection frameworks, and reinforce domestic and international coordination. No global financial standards apply specifically to BigTech. Given the cross-border nature of BigTech activities, global standards should be developed to facilitate internationally consistent regulation and effective cross-border cooperation.
Keywords:
BigTech; BNPL; conglomerate; emerging market and developing economies; financial stability; fintech; systemic risk; insurance; credit; payments; asset management; regulation; supervision; IMF Technical Notes; emerging market; Monetary and Capital Markets Department; risk identification; BigTech firm; Financial sector stability; Global; South America; Central America; Caribbean
Cover IMF Staff Country Reports
Kyrgyz Republic: Selected Issues
International Monetary Fund. Middle East and Central Asia Dept.
Selected Issues
Keywords:
staff team; copyright page; Policy recommendation; compliance cost; IMF country; tax fragmentation; Labor markets; Central bank policy rate; Employment; Labor market policy; Europe; Central Asia; Global; Middle East
Cover IMF Notes
Artificial Intelligence and Cybersecurity in the Financial Sector
Tobias Adrian
,
Tamas Gaidosch
,
Marina Moretti
,
Mahvash S Qureshi
, and
Rangachary Ravikumar
Artificial intelligence is reshaping cyber risk in the financial sector by accelerating the speed, frequency, and breadth of vulnerability discovery and potential exploitation. As AI becomes more deeply embedded in financial institutions and market infrastructures, it can strengthen cyber defense but also heighten systemic risk—particularly through shared digital infrastructure, common service providers, and machine-speed attack-defense dynamics that outpace human response. This note argues that the main financial stability concern lies less in new types of cyberattacks than in the scale effects AI can unleash across common technologies, amplifying how quickly and widely risks spread. Strong governance and technical controls that limit the “blast radius” of breaches—that is, the scope of damage they can cause—and effectively contain their spread, robust response and recovery capacity, and stronger international coordination will be essential to safeguard financial stability. A whole-of-nation approach, bringing together government, the private sector, and other stakeholders, is warranted given the cross-sector implications, limited private incentives for adequate cyber risk management, and benefits of public-private collaboration.
Keywords:
Artificial intelligence; financial stability; cybersecurity risk; governance; cyber risk management; IMF note; Dual-Use dynamics; machine-speed attack-defense dynamics; market infrastructure; IMF surveillance; Financial sector; Cyber risk; Financial sector stability; Global
Cover Selected Issues Papers
The Case for Borrower-Based Macroprudential Measures in Spain
Nina Biljanovska
and
Laura Valderrama
House prices in Spain have risen rapidly since the pandemic, and the share of riskier mortgages at issuance has increased, suggesting a potential buildup of mortgage-related vulnerabilities. This paper provides analytical inputs to inform the potential design and calibration of borrower-based measures (BBMs), currently not activated in Spain. It first reviews international experience with BBMs, then uses Spanish loan-level data and scenario-based stress tests to assess alternative calibrations. The results suggest that loan-to-value caps would deliver the largest reduction in default risk and mortgage portfolio losses, with additional gains from income-based caps. BBMs would complement capital buffers by addressing risks at origination.
Keywords:
Mortgage lending; borrower-based measures; mortgage default risk; housing markets; Spain; IMF country; issues paper; IMF staff; caps. borrower-based measure; calibration of borrower-based measures; Loans; Mortgages; Housing prices; Collateral; Credit; Global
Cover Selected Issues Papers
Firm-Level Innovation in Spain: Patterns, Drivers and Policy Implications
Younghun Shim
,
Isabel Figueiras
, and
Carlo Pizzinelli
While Spain’s productivity growth has picked up in recent years, a sizable gap with other high-income countries remains. One contributing factor is a large innovation gap vis-à-vis peer countries. Firm-level evidence shows that this gap is particularly pronounced among young firms and widens for higher-quality patents. Innovation is held back by size-dependent regulations, financial constraints, regulatory burdens, and the complexity of the R&D tax credit, which is generous on paper yet has low take-up rate. Quantitative simulations based on endogenous growth model suggest that easing these frictions could raise Spain’s long-term total factor productivity growth by over 0.25 percentage points.
Keywords:
Innovation; financial frictions; size-dependent regulations; R&D tax credits; IMF country; R&D tax credit; total factor productivity growth; take-up rate; vis-à-vis peer; Productivity; Tax allowances; Total factor productivity; Employment
Cover IMF Working Papers
Optimal Currency Basket Estimation
Etienne Vaccaro-Grange
Small open economies often anchor their exchange rate to a basket of foreign currencies, with weights typically set from trade shares or financial exposure. Such schemes ignore the heterogeneity of pass-through across currencies and the covariance structure of bilateral rates, and therefore do not minimize the volatility of imported inflation, the central bank’s mandate. This paper proposes a minimum-variance framework — formally analogous to a Markowitz portfolio problem in pass-through space — in which basket weights minimize the variance of exchange-rate-driven imported inflation, subject to a constraint that preserves the basket’s cumulative pass-through. Applied to the case of Fiji, an import-intensive island economy with a five-currency basket, the optimization reduces the variance of imported inflation by close to twenty percent, with results robust across alternative specifications.
Keywords:
currency basket; exchange rate pass-through; minimum-variance portfolio; small open economies; monetary policy; IMF working papers; inflation pass-through; pass-through space; heterogeneity of pass-through; basket weight; consumer price index; Currencies; Inflation; Exchange rates; Import prices; Pacific Islands
Cover IMF Working Papers
Central Bank Communication in Times of Uncertainty: AI-assisted Decoding of Recent Trends in Europe
Francesca Caselli
,
Luisa Charry
,
Larry Q Cui
,
Pragyan Deb
,
Allan Dizioli
,
Alexandra Fotiou
,
Ben Park
, and
Sebastian Weber
More frequent large macroeconomic shocks since the global financial crisis have entrenched uncertainty, particularly in Europe. This has increased the premium on central bank communication in guiding expectations and strengthening macroeconomic resilience. European central banks have responded by adapting their communication toolkits and styles. This study provides a systematic assessment of recent central bank communication across advanced and emerging European economies, combining a survey of institutional communication frameworks with novel text-miningbased indicators on monetary policy guidance in these economies over 2009-2025. While communication toolkits are broadly similar, their intensity and transparency differ markedly, with central banks in advanced economies making greater use of forward-looking tools. Central banks in both groups respond primarily to inflation uncertainty. However, communication strategies diverge, as central banks in advanced economies increasingly shift toward forward-looking language, whereas those in emerging markets shift toward more backward-looking communication. These patterns highlight credibility and institutional capacity as key determinants of central bank communication under uncertainty.
Keywords:
Central bank communication; uncertainty; forward guidance; monetary policy; central bank uncertainty; IMF working papers; communication in time; monetary policy uncertainty; Inflation; Central bank policy rate; Market interest rates; Monetary policy communication; COVID-19; Europe; Global; Middle East
Cover IMF Working Papers
The Political Economy of Foreign Exchange Interventions
Kodjovi M. Eklou
Exchange rate movements have implications for the purchasing power of residents or voters. Given that the exchange rate is often seen as a barometer of government performance, there could be strong incentives to influence exchange rate valuation during elections. This paper investigates whether political economy factors affect Foreign Exchange Intervention (FXI) policy across countries. It investigates whether central banks tend to implement FX sales, leaning against depreciations, during electoral periods in a sample of 28 countries including both advanced (AEs) and emerging (EMs) economies over the period 2000-2019. The results show that EMs with competitive elections tend to implement more and larger FX sales in pre-electoral period, compared to post-election period, given their political popularity. Further, this result is driven by countries where political pressures on central bank governors are more prevalent. Furthermore, the paper also finds that monetary policy transparency has the potential to mitigate this politically driven FXI during electoral period. Finally, the paper discusses policy implications given that politically motivated FX sales could hamper the ability of central banks to effectively respond to large shocks.
Keywords:
Foreign Exchange Interventions; Electoral Cycles; Monetary Policy; Political Economy; Transparency.; FX sale; IMF working papers; political economy factor; exchange rate movement; policy implication; Exchange rates; Foreign exchange intervention; Monetary policy transparency; Central bank transparency
Cover IMF Staff Country Reports
Portugal: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
The Portuguese financial sector has been resilient to shocks over the past decade, reflecting substantial deleveraging after the 2012 European debt crisis. Banks dominate the financial landscape, with strong capital and liquidity buffers and high profitability relative to peers. Credit growth is recovering after years of decline; while risks are currently moderate, ongoing monitoring is needed as the cycle evolves and the Middle East conflict unfolds. The sector has so far been resilient to rising global uncertainty.
Keywords:
banking sector risk; housing market risk; Fsap finding; risk accumulation; banking sector structure; BdP staff; work of the Financial Sector Assessment Program; Financial sector stability; Stress testing; Global; Middle East
Cover IMF Staff Country Reports
Burundi: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Burundi
International Monetary Fund. African Dept.
Burundi is a fragile, low‑income country facing structural challenges, including weak institutions and high vulnerability to external shocks. The legacy of the 2015 crisis and the conflict in neighboring DRC constrain development. Recent years have been characterized by low growth, high and volatile inflation, shortages, and external imbalances. A positive terms of trade shock since 2025, together with a fiscal adjustment in FY2025/26 have helped reduce imbalances and improve economic prospects. In January 2026, the government launched a “Macroeconomic Stabilization Plan” aimed at restoring macroeconomic stability through tighter fiscal and monetary policies, and advancing structural and sectoral reforms.
Keywords:
exchange restriction; IMF-World Bank mission; Financial Sector Assessment Program; IMF resident; public finance management; Debt sustainability analysis; Middle East; Global; Africa