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The Risk Telescope — IMF Firewalls and Political Math

Sun, 22 Apr 2012 18:14:25 GMT

​Today’s issue of The Risk Telescope focuses on the political math supporting the IMF’s expanded firewall facilities, relying heavily on pie charts and tables.  The conclusion is that the firewall is neither as large nor as solid as initial media and official statements suggest.  Moreover, by potentially over-reaching on the rhetoric in order to generate good headlines, the process may be raising expectations about the capacity of the IMF or the euro area to meet near-term needs without more drama.

Section II assesses the FSB’s latest progress report to the G20 and the prospects for global convergence regarding financial regulation in the near term. The conclusion is that the FSB’s excessively optimistic and superficial assessments of success combined with expansion into new areas lay the groundwork for significant disconnects as the year progresses and implementation delays continue to materialize.

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