INSTITUTE OF INTERNATIONAL FINANCE

ECONOMIC RESEARCH. IIF'S ECONOMIC RESEARCH DEPARTMENT CONTINUES TO LEAD IN THE FIELD OF MACROECONOMIC RESEARCH FOR EMERGING MARKETS. OUR PRIMARY PUBLICATION, GLOBAL MACRO VIEWS, ALONG WITH REPORTS SPECIFIC TO INDIVIDUAL COUNTRIES, HAVE CENTERED ON IMPORTANT THEMES WITHIN THE BACKDROP OF THE PERSISTENT GLOBAL GEOPOLITICAL UNCERTAINTY. OUR REPORTS IN 2024 HELPED TO IDENTIFY, ASSESS AND RECALIBRATE GLOBAL RISKS FROM TRADE TENSIONS, MILITARY CONFLICTS, FINANCIAL SANCTIONS, ECONOMIC FRAGMENTATION AND RISING DEBT LEVELS, ALL SET AGAINST A BACKDROP OF AN UNUSUALLY LARGE NUMBER OF CONSEQUENTIAL POLITICAL ELECTIONS OCCURRING THIS YEAR. THE TEAM CONTINUED TO WORK ON PAPERS THAT REFLECTED THESE GEOPOLITICAL UNCERTAINTIES, SUCH AS THE CRISIS IN THE MIDDLE EAST; ECONOMIC DEVELOPMENTS IN COUNTRIES GOING THROUGH SIGNIFICANT ELECTIONS, SUCH AS MEXICO; AND ON CHINA'S MONETARY AND FISCAL STIMULUS LAID OUT IN SEPTEMBER AND OCTOBER. A RECORD NUMBER OF MEMBERS ALSO JOINED OUR ECONOMIC RESEARCH TEAM ON IIF-LED INVESTOR TRIPS IN VARIOUS REGIONS, INCLUDING TO BRAZIL, CHINA, EGYPT, AND EASTERN EUROPE. THE IIF ALSO REMAINED COMMITTED TO HIGHLIGHTING DEBT-RELATED VULNERABILITIES ACROSS MATURE AND EMERGING MARKETS VIA ITS FLAGSHIP GLOBAL DEBT MONITOR AND THEMATIC REPORTS. AS A KEY PRIVATE SECTOR REPRESENTATIVE TO THE IMF'S GLOBAL SOVEREIGN DEBT ROUNDTABLE (GSDR), THE IIF WILL CONTINUE TO SHARE DEVELOPMENTS WITH OUR MEMBERS, MORE IMPORTANT NOW THAN EVER AS THE USE OF THE COMMON FRAMEWORK IS TESTED AND CHALLENGED.

REGULATORY AFFAIRS. AS REGULATORS CONTINUE TO REVIEW AND REVISE POLICIES, WE HAVE ENGAGED AND RESPONDED TO KEY CONSULTATIONS ACROSS JURISDICTIONS, ENSURING POLICIES PROMOTE EFFICIENT CAPITAL MARKETS AND THE MOBILIZATION OF INVESTMENT AND SAVINGS FOR THE BENEFIT OF LOCAL ECONOMIES. REGARDING PRUDENTIAL REGULATION AND FRAGMENTATION, THE IIF CONTINUED TO AGGRESSIVELY ADVOCATE FOR AN EFFICIENT, INTERNATIONALLY ALIGNED REGULATORY FRAMEWORK FROM A PRO-GROWTH PERSPECTIVE. WE HAVE ADVOCATED AGAINST THE VIEW THAT "MORE CAPITAL" IS ALWAYS BETTER AND AGAINST EXCESSIVELY ONEROUS SUPERVISORY PRACTICES THAT ARE STIFLING AND UNPREDICTABLE. THE IIF CONTINUED TO FOCUS ON HOW MITIGATE THE RISK OF FRAGMENTATION AS DIFFERING APPROACHES FROM SUPERVISORS TO CAPITAL AND LIQUIDITY REMAIN A KEY CONCERN. GOING FORWARD, THE IIF WILL NEED TO FOCUS ON THE BASEL III ENDGAME, A LEVEL PLAYING FIELD AND ON THE FUTURE OF GLOBAL STANDARD SETTING MORE BROADLY. REGARDING INSURANCE ISSUES, WE CONTINUED TO STRIVE FOR EFFICIENT AND PRAGMATIC CAPITAL REGULATION AND AVOIDING MISGUIDED APPROACHES TO SYSTEMIC RISK IN THE INSURANCE SECTOR. WE HAVE ALSO REINFORCED OUR ADVOCACY IN EMERGING AREAS, INCLUDING THE USE OF AI, CYBER AND OPERATIONAL RESILIENCE. FINALLY, WE CLOSELY WATCHED BOTH THE STRUCTURAL SHIFTS IN THE INSURANCE BUSINESS MODEL, INCLUDING PRIVATE EQUITY OWNED OR INFLUENCED INSURERS AND OFFSHORE ARRANGEMENTS, AND THE RESULTING REGULATORY RESPONSE. REGARDING NON-BANK FINANCIAL INTERMEDIATION (NBFI), WE RESPONDED TO MEMBER CONCERNS ABOUT POTENTIAL COMPETITIVE INEQUALITIES VIS-A-VIS NON-BANK PLAYERS AND HAD HAD AN ACTIVE YEAR ENGAGING WITH EXPERTS AND POLICY MAKERS TO GATHER EVIDENCE AND CONDUCT ANALYSIS OF POTENTIAL SYSTEMIC RISKS. REGARDING CYBER SECURITY, RESILIENCE AND THIRD-PARTY RISK, WE CONTINUED ADVOCATING FOR PRAGMATIC AND EFFECTIVE GLOBAL STANDARDS REGARDING CYBER RISK MANAGEMENT, THIRD PARTY RISKS AND THE DEVELOPMENT OF OPERATIONAL RESILIENCE PRINCIPLES FOR THE FINANCIAL SECTOR. THE IIF HAS SUPPORTED EFFORTS TO REDUCE FRAGMENTATION, INCLUDING IN THE AREA OF CYBER INCIDENT REPORTING.