ICC IMF Market Snapshot January 2012

ICC IMF Market Snapshot January 2012

The Banking Commission of the International Chamber of Commerce (ICC) and the International Monetary Fund (IMF) have jointly conducted a short survey to assess the most recent developments in European markets and their impact on global trade finance.

The Market Snapshot survey was in the field from 13-21 December 2011. The Market Snapshot questions focused on the impact of recent developments in Europe on trade finance, and the role of public sector measures.

The Way Forward and Conclusion

Market conditions are grim, with traders’ confidence eroding again in the grip of volatile markets, with supply and demand of trade finance being in jeopardy and regulatory constraints causing concerns. All of this is occurring against a backdrop of a global recovery, already feeble and rapidly decelerating. More importantly, a two-speed financial system seems to be crystallizing. The ICC-IMF market snapshot survey found sentiment for 2012 strongest for emerging Asia and weakest for the Euro area. What was striking is the degree of dependence on Euro area banks (over half for all regions), nontrivial effects of deleveraging by these banks, and the limited perceived support from MDBs and swap lines versus the constraints coming from Basel III capital and liquidity charges. Indeed, as the world goes through a deleveraging process, particularly in Europe, and most governments no longer have the flexibility to implement fiscal stimulus, economic growth is expected to be lower in 2012 and probably negative in some regions. In these circumstances, there is an urgent need for concrete and durable solutions to be forged at an international level.

Contents

SECTION 1 • Background and Methodology

SECTION 2 • Key Findings

SECTION 3 • The Way Forward and Conclusion

SECTION 4 • Annexes