Macroprudential Policies for a Resource Rich Economy the Case of Mongolia

48 Pages Posted: 22 Feb 2013

See all articles by Rodolfo Maino

Rodolfo Maino

International Monetary Fund (IMF)

Patrick A. Imam

International Monetary Fund (IMF)

Yasuhisa Ojima

International Monetary Fund (IMF)

Date Written: January 2013

Abstract

This paper explores the extent to which macroprudential tools can be used to manage banking sector risks in Mongolia, a commodity producing country exposed to both procyclical and cross-sectional financial sector risks. Loose fiscal policy, rising credit activity, and heightened risk appetite attributable to the commodity boom are fuelling price volatility in asset markets, posing significant risks to financial stability if left unchecked. Rising interconnectedness, potential increase in dollarization and concentrated exposures are compounding those risks. Macroprudential tools can complement fiscal and monetary policy adjustments to avoid the buildup of vulnerabilities in the banking sector.

Keywords: Banking sector, Credit expansion, Credit risk, Fiscal policy, Macrofinancial Linkages, Macroprudential Policies, Macroprudential Policy, Monetary policy, Mongolia, Natural resources, Systemic Risk

JEL Classification: G10, G20, G21, C50

Suggested Citation

Maino, Rodolfo and Imam, Patrick A. and Ojima, Yasuhisa, Macroprudential Policies for a Resource Rich Economy the Case of Mongolia (January 2013). IMF Working Paper No. 13/18, Available at SSRN: https://ssrn.com/abstract=2222482

Rodolfo Maino (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Patrick A. Imam

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Yasuhisa Ojima

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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