GROUP 7 International Monetary Fund: Responsibilities and Interventions in Europe


The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership.


The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944. The 44 countries at that conference sought to build a framework for economic cooperation to avoid a repetition of the competitive devaluations that had contributed to the Great Depression of the 1930s. They expected that this new global entity would ensure exchange rate stability and encourage its member countries to eliminate the exchange restrictions that hindered trade.


The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

The following points list some of the responsibilities of the International Monetary Fund:

  1. To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
  2. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
  3. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
  4. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
  5. To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
  6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.“Articles of Agreement: Article I—Purposes,” International Monetary Fund, accessed May 23, 2011.                                                                                                                            


The IMF is actively engaged in Europe as a provider of policy advice, financing, and technical assistance. We work independently and, in European Union (EU) countries, in cooperation with European institutions, such as the European Commission (EC) and the European Central Bank (ECB). The IMF’s work in Europe has intensified since the start of the global financial crisis in 2008, and has been further stepped up since mid-2010 as a result of the euro area crisis.

Assessing Individual countries and the euro area

The IMF provides economic analysis and policy advice as part of its standard surveillance process for individual advanced and emerging European economies that culminates in regular (usually annual) consultations with individual member countries and, if relevant, EU institutions such as the ECB and EC. The bilateral surveillance staff reports for these consultations include assessments of the economic outlook, and economic and financial stability.

In addition to its policy discussions with the 19 individual members of the euro area, IMF staff also holds consultations annually for the euro area as a whole, similar to those held for other currency unions. Here, IMF staff exchange views with counterparts from the ECB, the EC and other European institutions in a number of areas, including monetary and exchange rate policies and regional fiscal policies, financial sector supervision and stability, trade and cross-border capital flows, as well as structural policies. The final staff report includes an overall assessment of the economic outlook, external and fiscal position, and financial stability of the euro area as a whole. As part of the euro area consultation, the IMF’s views on the economic outlook and policies of the euro area are presented to the Eurogroup, comprising the 19 finance ministers of the euro area.

Providing financing

Since the start of the global financial crisis, a number of emerging and advanced European countries have requested financial support from the IMF to help them overcome their fiscal and external imbalances. Access to IMF resources for Europe was provided through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL), the Precautionary and Liquidity Line (PLL), and the Extended Fund Facility (EFF)

Most of the first wave of IMF-supported programs in 2008-09 was for countries in emerging Europe. The IMF also provided financing to Iceland when its banking system collapsed in late 2008. Starting in 2010, credit was also provided to euro area members – Greece, Ireland, Portugal and Cyprus. Credit outstanding to these members peaked in July 2014 at SDR 66.3 billion, but has declined to about SDR 29.7 billion as of September 16, 2016, due in part to early repayments by Portugal and Ireland

 As of September 16, 2016, the IMF had active arrangements with 6 emerging market countries in Europe (see table) with commitments totaling about EUR 33.9 billion or $38 billion. Total credit outstanding to European members was around EUR 49.4 billion or around US$ 55.4 billion.




Retrieved from

Retrieved from

Retrieved from

Retrieved from

Group 7 : Analysis of the FED’s federal discount rates over the past 10 years

What is the FED’s discount rate ?

How does the Federal Reserve determine the discount rate ?

There are several different discount rates offered through the Federal Reserve system. Technically, discount rates are set by each individual Reserve branch and its board of directors, but their decisions are subject to review by the Board of Governors of the Federal Reserve. However, transitions from regional to national credit markets have produced a national discount rate across all Reserve banks.

Most references to the Federal Reserve’s discount rate are actually talking about the primary credit rate. The primary credit rate is the interest rate charged on short-term (normally overnight) loans that are made by the Fed to commercial banks and other financial institutions. These transactions take place through a lending facility known as the discount window.

Typically, this prime credit rate is set a little higher than short-term market interest rates. Since these rates are often targeted by the Fed’s bond purchase or quantitative easing programs, most of the control over the discount rate rests with the central bank anyway. Discussions about the target rates for the Federal Reserve occur at Federal Open Market Committee meetings.

Prime credit rates are only offered to institutions that the Fed believes have solid financial health, greatly reducing the default risk. Secondary credit rates may be offered to institutions that need short-term liquidity but don’t qualify for prime credit. These rates are set above the interest rate on prime credit. The last discount rate is for seasonal credit, which is extended to small institutions that have recurring annual fluctuations that limit cash flow. These tend to be in the agricultural or tourist communities.

The non-prime rate is also referred to as the base rate or the repo rate. All of these are distinct from the federal funds rate, which is the interest rate at which banks and other institutions lend to each other.

FED’s discount rates over the past 10 years

January 2007 : 6.25
January 2008 : 3.50
January 2009 : 0.50
January 2010 : 0.50
January 2011 : 0.75
January 2012 : 0.75
January 2013 : 0.75
January 2014 : 0.75
January 2015 : 0.75
January 2016 : 1.00
The following graph shows the evolution of the FED’s discount rates
Analysis of the FED’s discount rates over the past 10 years
We can say that the FED’s discount rates have generally known a decrease between 2007 and 2009 because of the subprime crisis. In fact, we can see that From January 2007 to January 2008, the discount rate has decrease for about 2.75 percent what is huge. But it is not the worst, actually, the following year, we can also observe a decrease of 3 percent in the discount rate. This is due to the fact that a lot of Financial institutions were affected by the crisis and in response to this, the Federal reserve decide to lower the discount rate in order to stabilize the Financial market.
Then from January 2009 to January 2010, the discount rate is stable.
Next, in January 2011, the discount rate knows a little increase of 0.25 percent since the Financial institutions start recovering from the crisis is the market is quite stable.
This discount rate is going to stay stable until January 2015.
Finally, between January 2015 and January 2016, there is a little increase of the discount rate .
Video retrieved from
Picture retrieved from

How does the Federal Reserve determine the discount rate? | Investopedia


Group 7: Analysis of the strategy of Prundential and HBSC after the Brexit anouncement

What does Brexit mean?

It is a word that has become used as a shorthand way of saying the UK leaving the European Union – often known as the EU, which is an economic and political partnership involving 28 European countries – merging the words Britain and exit to get Brexit, in a same way as a possible Greek exit from the euro was dubbed Grexit in the past.

Why is Britain leaving the European Union?

A referendum – a vote in which everyone (or nearly everyone) of voting age can take part – was held on Thursday 23 June, to decide whether the UK should leave or remain in the European Union. Leave won by 52% to 48%. The referendum turnout was 71.8%, with more than 30 million people voting.

The Brexit has made an important on the UK pound when happened. In fact it has lead to the devaluation of the sterling. And a lot of financial insistutions have suffered of this devaluation. We are going to illustrate this by the example of the HBSC and the Prudential.

Actions of HBSC after the annoncement of the Brexit : HSBC ‘plans to move 1,000 jobs to Paris’ due to Brexit

The top boss of HSBC has said it is planning to move some staff from London to Paris following Britain’s exit from the European Union.

Chief Executive Stuart Gulliver revealed that in interviews at the World Economic Forum in Davos, Switzerland.

He said that Europe’s biggest bank would likely look to shift around 1,000 workers who generate around 20 percent of its trading revenue.

HSBC’s global banking and markets division that houses those trading jobs made profits of $384 million in the UK in 2015, according to a company filing.

The timing on that is in around two years’ time when the UK has fully left the EU.

“We’re not moving this year and maybe not even next year. We will move in about two years time when Brexit becomes effective,” Gulliver said.

HSBC is at an advantage to its major US rivals as it already has a large subsidiary in Paris that holds most of the licences needed by an investment bank, meaning Gulliver has been able to set out more detailed plans.

Gulliver said HSBC will especially monitor developments on work permits, given that his bank’s UK operations employ about 2,100 EU citizens in the UK and 1,300 more staff from outside the bloc.

HSBC is in the middle of a program to redeploy as much as £122bn in assets to Asia and hire 4,000 people in the Pearl River Delta region around Hong Kong.

Actions of Prudential after the Brexit anouncement :  Prudential could relocate M&G funds due to Britain leaving the EU

Prudential said its UK operations, which includes fund management division M&G, could be hit by Brexit.

Prudential, the UK’s largest insurer by value, has said it is considering shifting funds from M&G, its assets management business, to Dublin or Luxembourg following UK’s vote to leave the EU.

A tenth of Prudential’s M&G’s £255.4 billion in assets under management are from EU clients.

Anne Richard, the chief executive of M&G, said the decision to move assets will depend on the outcome of UK’s negotiations with the EU.

« What we are trying to do as a business is give ourselves options so we are in a position to react and adapt to whatever negotiations come through over the next year or so regarding Brexit, » Richard said.

« We have, at the moment, business domiciled in both Dublin and Luxemburg so both of those would potentially be options for us if we felt that we should have additional funds domiciled in continental Europe, » she added.

British insurers were hit hard in the immediate aftermath of the Brexit vote, with share prices tumbling on expectations that the fallout in the broader economy would hurt the firms.

« On Brexit it is a challenge for the whole industry in that we don’t know exactly what form it will take. Will there be fund passporting from the UK to Europe, and vice versa, or not? »  Richard said.

The news that Prudential UK operations could be hit by Brexit came as the group released its first half results.

Prudential posted a 6 per cent increase in first-half profit as a jump in earnings at its Asia business helped it to beat analyst estimates and offset lower profits from M&G

M&G’s operating profit declined by 10 per cent to £225 million.


Group 7 : Banking innovation, services and new technology: how are modern banks attracting new customers?

These last few decades have seen a lot of innovations in many domains. The banking system is also concerned by these innovations. The aim of this article is to show these ones.

To prioritize innovation, Accenture collaborated with the digital bank in setting up its front-end IT system and digital processes independent from the parent bank. The team was determined to adopt market solutions only for very specialized features, and preferred custom development or open source to reduce costs. The system’s development was agile-based, leveraged responsive design and a hybrid mobile app approach to support multiple devices with the same page and adopted new technologies, like the login by voice or social alerts or digital signature, to be the most innovative bank in its national market. The new front end was also designed to integrate with the banking group’s core system, provide an excellent user experience, a high degree of personalization, like the capability to choose among 9 different languages, and a high level of online service (i.e. account opening in 1 hour). We can take the example of the Moven application which is designed to manage your budget.

Picture from×215.png& Q6uKEi3u8wIWVM&ei=GDCLWMCABsXvUtzOmsgB&tbm=isch&iact= rc&uact=3&dur=332&page=0&start=0&ndsp=31&ved=0ahUKEwjA7O60neLRAhXFtxQKHVynBhkQMwgmKAowCg&bih=710&biw=1536

The online bank was successully launched within the first year, and the combined team migrated from the parent bank the financial advisors and related 100,000 customers on schedule. Within the first three months, the online bank had acquired approximately 10,000 new digital customers, and is recognized as a recommended-practice leader in its national market for social banking, customer experience and innovation.

With the online bank already on track for its three-year goals of 500,000 new customers and 100 percent return on investment, the bank is considering extending the digital offering to other customer segments with the same mix of innovation and high service levels.


To attract and keep customers, banks try to create a pleasant environment for them. For instance, at one West Coast bank, customers can spread yoga mat and strike a tree pose or grab a free beer during an Oktoberfest-style celebration. Another national bank offers macchiato at its coffee bar and couches designed for lounging. Locally, banks are adopting Apple Store-like designs, adding concierges, and setting aside space for community groups to meet. Bank of America, for example, recently launched what it calls a flagship office in Boston’s Back Bay, housing in one place the variety of financial services offered by the banking giant. Teller services are squeezed behind a column, while private offices where more lucrative business is conducted dominate the floor space. Capital One Financial Corp., well known for its credit cards, is breaking into the Boston banking market with six new marketing offices called “cafes.” Scheduled to open over the next several months, they will resemble coffee shops more than banks. Employees will serve up java and sandwiches, along with advice on how to set up online accounts and access other services. Modern and innovatively designed branches will drive customer engagement and is the key to branch long-term success.


In the same purpose, they tend to maintain a close relationship with their customers and stay available 24/7 to satisfy their needs as quickly as possible. Equally, some banks are becoming more than just 24*7 by offshoring, with banks such as Standard Bank, South Africa, offering a single dashboard to let relationship managers connect with their clients via any media the client prefers to use including WeChat, Facebook Messenger, Google Hangouts, Whatsapp and so on …


The following video shows also an innovation related to the banking system.

Nowadays, innovation is something very important and even if banks have already made a lot of improvements in the way they provide their services, they are still thinking of new innovations to attract new customers and make the customer bank experience pleasant but also highly secured like the following video shows.


Picture from×215.png& Q6uKEi3u8wIWVM&ei=GDCLWMCABsXvUtzOmsgB&tbm=isch&iact= rc&uact=3&dur=332&page=0&start=0&ndsp=31&ved=0ahUKEwjA7O60neLRAhXFtxQKHVynBhkQMwgmKAowCg&bih=710&biw=1536