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This report is the seventh in a series of evaluation updates by the Independent Evaluation Office of the IMF (IEO) that return to past IEO evaluations and assess the continuing relevance of their main conclusions. The report revisits the 2007 evaluation of IMF Exchange Rate Policy Advice, which found that the IMF was “not as effective as it needed to be” in fulfilling its responsibilities for exchange rate surveillance in the period 1999–2005. While acknowledging the inherent complexity of providing exchange rate policy advice, including the lack of professional consensus on many of the key issues, the evaluation observed serious weaknesses in the IMF’s work on key analytical issues and in its engagement with members. The update finds that the IMF has substantially overhauled its approach to exchange rate policy advice since 2007. Key steps taken include: adoption of a more comprehensive approach to exchange rate surveillance under the 2012 Integrated Surveillance Decision; development of enhanced analytical tools; a new institutional view on capital flows; and introduction of the annual External Sector Report that provides an integrated picture of the external balances of major economies. The IMF continues to work on further enhancements of its approach. Nonetheless, the update concludes that challenges remain that impact the effectiveness of the IMF’s work in an area central to its mandate. The approach for assessing external balances and exchange rates continues to be contentious, in part reflecting differing views across the membership about the process of external adjustment. There are also ongoing questions in other areas, including considerations for exchange rate regime choice, attention to policy spillovers, the institutional view on capital flows, and data availability. The update suggests that the persistence of key issues identified in 2007 merits a full evaluation by the IEO.

Balance of payments --- Currency --- Current Account Adjustment --- Current account --- Development Planning and Policy: Trade Policy --- Exchange rate arrangements --- Exchange rate policy --- Exchange rates --- Exports and Imports --- External balance assessment (EBA) --- External position --- Factor Movement --- Foreign Exchange Policy --- Foreign Exchange --- Foreign exchange --- International economics --- International finance --- International Investment --- Long-term Capital Movements --- Short-term Capital Movements --- Saudi Arabia

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This Selected Issues paper analyzes factors that could bring inflation back to target in Thailand. The paper estimates a hybrid New Keynesian Phillips curve with time varying parameters to gauge the quantitative role of (long-term) inflation trends, economic slack, and import price inflation in shaping inflation dynamics. The analysis reveals some important changes in Thailand’s inflation dynamics. It suggests that the impact of lower import prices was a major factor behind the decline in headline inflation in 2015, with low oil prices the largest contributor to inflation dynamics. Monetary policy easing, within a broader expansionary policy mix, should help bring inflation back to target.

Thailand --- Economic conditions. --- Banks and Banking --- Exports and Imports --- Inflation --- Investments: General --- Macroeconomics --- Price Level --- Deflation --- Investment --- Capital --- Intangible Capital --- Capacity --- Current Account Adjustment --- Short-term Capital Movements --- Empirical Studies of Trade --- International Investment --- Long-term Capital Movements --- International economics --- Banking --- Monetary economics --- Private investment --- Current account --- Terms of trade --- External balance assessment (EBA) --- Prices --- National accounts --- Balance of payments --- International trade --- External position --- Saving and investment --- Economic policy --- nternational cooperation --- International finance --- Nternational cooperation

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The Methodology review identified three broad areas for improving the EBA-Lite methodology: (1) expanding the fundamentals and policy determinants in the CA and REER regressions to better capture the external balance of EBA-Lite countries; (2) identifying alternatives to regression models for external assessments of large exporters of exhaustible commodities; and (3) a revised approach for the assessment of external sustainability in highly indebted economies. Accordingly, the revised methodology consists of three modules: 1) Regression Module 2) Module for External Assessments of Exporters of Exhaustible Commodities 3) Module for the Assessment of External Sustainability.

Fiscal policy --- Foreign exchange rates --- Econometric models. --- Balance of payments --- Climate --- Current Account Adjustment --- Current account --- Environment --- Expenditure --- Expenditures, Public --- Exports and Imports --- External balance assessment lite (EBA-Lite) --- External position --- Global Warming --- Health care spending --- International economics --- International finance --- International Investment --- Long-term Capital Movements --- National Government Expenditures and Health --- National Government Expenditures and Related Policies: General --- Natural Disasters and Their Management --- Natural Disasters --- Natural disasters --- Public finance & taxation --- Public Finance --- Short-term Capital Movements --- Ecuador

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This article summarizes the European Union’s stress testing exercises and future priorities. The 2011 solvency stress testing was marked by methodology and data. The exercise forced banks to increase the quality and quantity of capitalization. This test has many controversial issues, but the benefits of this bold approach overshadow the risks. Several stress testing exercises have filled the pages of literature; an additional stress test is reviewed here.

Banks and banking --- Bank failures --- Failure of banks --- Business failures --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Risk management --- Prevention. --- Bank examination --- Bank auditing --- Auditing --- Examinations --- E-books --- Accounting --- Banks and Banking --- Exports and Imports --- Finance: General --- Financial Institutions and Services: Government Policy and Regulation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- International Investment --- Long-term Capital Movements --- Public Administration --- Public Sector Accounting and Audits --- International economics --- Financial reporting, financial statements --- Stress testing --- External balance assessment (EBA) --- Liquidity stress testing --- Financial statements --- Financial sector policy and analysis --- External position --- Public financial management (PFM) --- Solvency stress testing --- Financial risk management --- International finance --- Finance, Public --- Spain

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This article is an analysis on the restructuring banking system of the European Union. The global financial crisis created the need to restructure by immensely reflecting weaknesses in the public, households, corporate, and other financial sectors. The restructuring includes the strengthening of bank resolution tools, the activation of nonperforming loans, the maintenance of macrofinancial framework, recovery of market access, and so on. The Executive Board recommends this transition of the European Union because this paves the way to financial stability globally.

Bank management --- Banks and banking --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Management --- Banks and Banking --- Exports and Imports --- Industries: Financial Services --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- International Investment --- Long-term Capital Movements --- General Financial Markets: Government Policy and Regulation --- Economic & financial crises & disasters --- International economics --- Bank resolution framework --- Bank resolution --- Nonperforming loans --- External balance assessment (EBA) --- Financial crises --- Financial sector stability --- Financial sector policy and analysis --- External position --- Crisis management --- Loans --- International finance --- Financial services industry --- Ireland