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  Issue 22 | Archive February 2015

RMI-CRI to Collaborate with the International Monetary Fund

On 26 January 2015, the International Monetary Fund (IMF) officially confirmed its collaboration with RMI¡¯s Credit Research Initiative (CRI) through its Monetary and Capital Markets Department (MCM) on the advanced stress testing and risk modeling project.

The joint research program will focus on the development and implementation of risk measurement tools useful for financial surveillance and risk management. Specifically, IMF intends to adopt an automated stress testing system into its Financial Sector Assessment Program (FSAP), which involves periodic assessments of systemic stability of its member countries, including the 33 jurisdictions that have been deemed systemically important financial systems.

The global financial crisis showed that the health of a country's financial sector has far-reaching implications for its economy as well as for other countries. The FSAP, established in 1999, is a comprehensive and in-depth analysis of a country's financial sector. FSAP assessments are ¡°the joint responsibility of the IMF and World Bank in developing and emerging market countries and of the Fund alone in advanced economies,¡± according to IMF.

The official launch of this joint research program marks a milestone for both the CRI project and RMI. ¡°The 2008 global financial crisis has underscored the critical importance of ensuring global financial stability. It is very heartening that NUS, through the pioneering work of RMI, can make a contribution towards the achievement of this vital goal,¡± commented NUS President Prof. Tan Chorh Chuan in his State of the University Address 2014 on the project which was being discussed at the time.

The program, which initially prioritizes the development and implementation of an operational framework for automated stress testing, will consist of multi-dimensional activities including expert exchange program, participation of RMI-CRI staff in MCM-led missions and technical assistance work, and co-organization of conference on credit risk and stress testing, to foster cross-fertilization of ideas and synergies in the domain.

¡°We are very glad to embark on this exciting and meaningful collaboration. It has sent us, all CRI staff, a very encouraging signal for all the hard work we have been doing since 2009,¡± said Prof. Duan Jin-Chuan, project lead of RMI-CRI. ¡°This can also provide a significant platform for the CRI team to exchange advanced technology and knowledge with the IMF colleagues, and help improve global financial stability.¡±

Since RMI-CRI was established based on a ¡°public good¡± concept and the IMF provides a public service, methodologies developed in the joint research program will be made available to the public through difference media, including but not limited to the working paper series of both institutions and their websites.

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Published quarterly by Risk Management Institute, NUS
Editor: Ivy Wang (rmiwy@nus.edu.sg)