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Published April 2009
The International Monetary Fund (IMF) released its semi-annual Global Financial Stability Report on April 21, 2009.
The executive summary states, "The refinancing needs of emerging markets are large, estimated at some $1.8 trillion in 2009, with the bulk coming from corporates, including financial institutions. Though notoriously difficult to forecast, current estimates are that net private capital flows to emerging markets will be negative in 2009, and that inflows are not likely to return to their pre-crisis levels in the future. Already, emerging market economies that have relied on such flows are weakening, increasing the importance of compensatory official support."
Chapter 1 adds, "As a result of continued pressures in credit markets, global financial institutions and other holders could face larger potential writedowns, according to our estimates. Looking at the range of assets originated in the United States over the same cumulative period (2007–10) as in prior GFSRs, expected writedowns have risen to some $2.7 trillion, up from the $2.2 trillion estimated at our interim update in January 2009, and from the $1.4 trillion estimated in October 2008. The rise represents the credit deterioration that the worsening economic cycle is creating. Considering a much wider set of outstanding loans and securities to include European-originated loans and related securities as well as Japanese-originated assets (totaling some $58 trillion compared to earlier estimates based on $27 trillion of U.S. originated loans and securities) provides a broader, albeit more uncertain, assessment of potential writedowns of some $4.1 trillion. While banks are expected to bear about two-thirds of the writedowns, other financial institutions including pension funds and insurance companies also have significant credit exposures. Among other market participants, hedge funds have suffered losses related to both mark-to-market declines and forced asset liquidations due to redemptions."
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