National Wealth approach to financial stability
One of the key lessons of the GFC is the criticality of macro-financial linkages. However, these are still not well understood, while an integrated analytical framework has remained elusive to this day. The “national wealth approach”, as a component of the broader balance sheet approach that relies on wealth as the analytical anchor and on the national accounting framework and concepts, aims at elucidating these key linkages through “data bilingualism”. The early results are encouraging, in terms of better understanding old systemic crises, bringing about deeper insights on financial stability challenges in key countries, like the US and China, and developing a more articulate crisis prevention policy agenda.
Olivier Frécaut, a graduate of the Paris Institute for Political Studies, is a Lead Financial Sector Expert at the IMF. Olivier was a staff member of the French central bank between 1978 and 1992, including 10 years as a bank examiner. Since joining the IMF, he has done mission work in 44 countries, providing technical assistance and managing several banking crises, including in Indonesia from 1997 and in Europe between 2008 and 2015. He is now leveraging his field experience to focus on crisis prevention through papers and seminars, both within the IMF and around the world.