LIVE: International Monetary Fund Holds Press Briefing on Global Financial Stability Report

Good morning everyone and thank you very much for joining us here today. I'm Meera Lewis from the Communications Department. And today I'm joined here by Tobias Adrian. He's the Financial Counselor and the Director of the Monetary Capital Markets Department. Also with us today I have Thanos and Jason, Deputy Director and Assistant Director from the Monetary Capital Markets Department. I think by now I expect everybody should have had the JFSR accessible. You can access it on the website and you can also please join us by Webex if you can't be here personally. So before we start and take your questions I'll turn the floor over to Tobias for a few remarks and then we'll come to you for questions. Thank you. Tobias. Thanks so much Meera and good morning everybody. Financial markets are being challenged by the war in the Middle East. The financial system has been resilient so far. This Global Financial Stability Report highlights that channels of financial vulnerabilities could amplify turmoil under some circumstances. The conflict has alternated between escalation and de-escalation generating bouts of volatility but not the kind of sustained drawdowns that we have seen in previous times of liquidity stress. We also haven't seen the margin calls and forced deleveraging that has occurred a number of times in recent years. So markets have been functioning in an orderly manner. Central banks have been supporting markets in a number of countries through liquidity facilities and of course there have also been structural improvements in markets for example through central clearing. We also see the benefits of resilient banks which remain well capitalized and liquid and so the banking system is not a worry at this point at this particular juncture. Now having said all that the resilience is not assured in all states of the world and let me go into some of the vulnerabilities. Elevated public debt and private debt, rollover risk as well as the bank sovereign nexus continue to make bond markets fragile at least in some countries and we particularly focus on the presence of leveraged investors in these markets. So as governments have issued more debt a lot of non-banks have stepped in and we look in great detail in this global financial stability report at those issues. Other risks that we are looking at include private credit as well as technology related investments and we particularly focus on leverage and interconnectedness in these areas. Of course we also spend quite a bit of time on emerging markets. There are additional risks in emerging markets, quite a bit of the non-bank flows have dominated emerging market financing and they can be subject to shifts in global risk appetite. Now one of the main themes of this report is the limited policy space in many countries. You know when we think back over the past five or six years oftentimes governments have come in to support financial stability with the policy space but the policy space has been drawn down in many countries. So against this backdrop it is very important for countries to safeguard financial stability by monitoring closely how vulnerabilities are evolving, taking macro actions where necessary, having strong oversight of the banks and the non-banks and of course being operationally ready to inject liquidity. The task for policymakers is not in and of itself to predict shocks. It is very hard to know what shocks are going to come down but rather to ensure that vulnerabilities are contained, are understood and that actions can be taken if there are any instabilities that arise. Finally let me underline that artificial intelligence represents both opportunities and risks and one of the risks that we are highlighting is the cyber security risk in this area. So that needs to be managed carefully and the appropriate policy steps need to be taken there as well. Thank you. Thank you Tobias and so now we'll open the floor up to questions. Please you can also join via Webex and also submit your questions online. So perhaps we can start with like a global question. The lady in the front over here. Thank you so much. My name is Rui. I'm with 21st Century in Guangdong, China. So my question is that with ongoing geopolitical risks affecting energy markets, how does the IMF assess the renewed inflation shock fading back into global financial stability system? And also how do current geopolitical risks and you just mentioned rising physical pressures as well as volatile market cash flows all interact together in shaping global financial stability? Thank you. Thank you. Tobias. Yeah so the first order impact of the higher oil prices that have resulted from the war in the Middle East is that inflation expectations have increased and that is fairly broad across countries globally. Now we can look at markets data to look at what the implied path for inflation is and so far what we are seeing is that the expected inflation impact is somewhat contained in time so that inflation expectations remain well anchored further out into the future, say three, four, five years into the future, the expectations of inflation are coming back down. So it's a temporary bout of inflation that is priced into markets and that then generates the kind of policy advice that we're giving which is that for central banks the option value of waiting in many cases is high so that you want to see how lasting the conflict is, how persistent the energy shock may be. So you know some central banks may start tightening early, others may wait in order to have more resolution of uncertainty. Thank you. Thank you, Tobias. Anybody else? The other gentleman over there. Thank you. Rodus Adiri with Horizon News, Lagos, Nigeria. Just two quick questions on policy space for emerging markets. Nigeria, for instance, has a budget benchmark, oil benchmark of $64 a barrel and worth $97 now. The ability to act based on higher benchmark, is that offset by possible demand destruction? And on AI, the data centers require a lot of energy and we've seen a number of hyperscalers raise money. I think Amazon raised about $54 billion in a bond issuance back in March. Does the war and the energy requirements of data centers, does that kind of upend the ability to raise debts to build them out? Thank you. So before we take further questions, are there any other questions on AI? Yes, the lady over there and the gentleman back there. Thank you, Lauren in Bloomberg News. Thanks for taking the question. Just when you talk about the cyber security issues related to AI, are you talking about the issues around that we've seen this week around like my thoughts on Anthropic and do you have any advice for institutions as they try to manage that, particularly around the topic of the need for global cooperation around that? Thank you. Thank you. There's one more question on AI back there. Sure. Thanks a lot. Matthew Lee, Inner City Press. Actually, I was going to ask about Anthropic as well because obviously it's in the news. So to go beyond what my colleague asked, this dispute between the Department of War and as a supply chain risk in Anthropic, you have, I guess, overall, I wanted to know what guidance can the IMF give to government agencies in terms of dealing? Is it just the sort of voluntary compliance of an Anthropic or what can be done to stop some of these models before they cause havoc in the markets? Thanks a lot. Thank you. So perhaps we can start with the AI and then switch to the emerging markets. Yeah, absolutely. So let me start with AI. So the first AI question was really about the energy consumption of artificial intelligence data centers. And of course, it depends on the location of the data centers, right? So in some locations, you have a fairly elastic supply of energy. In other locations, you have a more inelastic supply. And we have certainly heard anecdotally that data centers do have an impact on energy prices in the region where they are located. To what extent the oil price shock is going to feed into the financial position of hyperscalers, I think is something that remains to be seen. I don't think we have a clear reading for the moment on this question. Now, let me turn to cybersecurity. And let me start by pointing out that at the IMF, we have supported agencies in our member countries for over eight years now on cybersecurity questions. So basically, what we are doing is to help regulators and central banks around the world to put into place regulatory frameworks relative to cybersecurity issues in the financial sector. And we have seen quite a lot of demand for this kind of support to our membership. You know, cybersecurity is certainly a rising risk. And it is extremely important for global financial stability to make sure that any cybersecurity threats are addressed very quickly. Now, with a specific sort of question about the intersection between artificial intelligence and cybersecurity, of course, you know, artificial intelligence is a very powerful tool that can be used for good and for bad. And I think the developments last week were really focused around making sure that artificial intelligence is used to protect the integrity of financial institutions and other corporations and governments around the world. So our advice is, you know, to really stay at the frontier of all of these threats and to be extremely proactive in terms of the policy frameworks relative to cybersecurity, but also relative to the operational readiness to act when necessary. Now, finally, there was the question about oil prices and, you know, policy space, specifically with respect to Nigeria. But I think there's a broader question here as well. And I would start and then perhaps turn to my colleagues to also complement me. You know, basically, you know, some countries are benefiting from higher oil prices if they're net exporters of oil. But even when you benefit because you're a net exporter, you still have an impact on the cost of oil. So you still have an inflationary impact. And so central banks will be confronted with the question of what actions to take relative to the rise in inflation. Now, of course, for energy importing countries, the challenge is even larger, because on the one hand, you have the inflationary pressure, but you may also see constraints in terms of actually getting energy supplies. And in fact, we see that about 80 countries around the world have introduced some measures to save on energy. So it is very country-specific. And generally, oil importers have seen their spreads rise relatively more than oil exporters. Let me just complement by saying that there's obviously vulnerable groups, population in emerging markets that are suffering from the increase in energy prices and perhaps food prices later. As a whole, emerging markets, it is, in our view, too early to think about the adverse demand effects necessarily and whether this is going to offset the higher prices. And therefore, Tobias's message about monetary policy waiting and seeing and maintaining the option value is a rather important one. I would just end by saying that overall emerging market, at least from financial markets perspective, has been fairly resilient through this period so far. And much of that has to do with credible policies, including monetary policy. And therefore, it is important for central banks to act decisively when they actually start to see the impact on inflation and inflation expectations from this particular period. Thank you. And also just staying on emerging markets, we got another question online that's talking from Fatma Ibrahim. She asks, how does the IMF assess Egypt's resilience against potential sudden outflows from non-bank financial institutions? Yeah, that's a great question. And in the case of Egypt, we have seen an adjustment in the exchange rate relative to the shock. And that is exactly aligned with our macroeconomic advice for countries such as Egypt and other emerging markets. Basically, exchange rates can be a very helpful shock absorber in times of situations such as these, where oil prices have risen suddenly. Now, of course, for the domestic economy, you also have the impact on inflation in terms of energy prices, but also in terms of food prices. And we are not seeing an immediate impact on financial stability to date. But that's, of course, something that we are watching very closely. And maybe if I can complement, in the Egyptian case, there has been a greater exchange rate flexibility, tighter monetary policy, and better fiscal policy that has all fed into the more resilient background heading into the war in the Middle East. And that has helped contain the impact on exchange rate on other financial market asset prices in the case of Egypt. So I think we should take this as a fairly positive lesson. Going forward, maintaining financial system stability maintains pretty paramount. And in particular, focusing on banking sector and how it could support the real economy after the war as we head towards the next stage of this conflict would be very important. Thank you. So before I come back, I'll come to you. But we just have somebody who's been waiting patiently on Webex. So it's Doa. We'll go to you on Webex. Hello, Maria. Good morning. Good morning. Good morning for you, all colleagues. Thank you so much for taking my questions. I have two questions. One is on a regional level, and the second is a country-focused one. On a regional level, to what extent the ongoing war in the region? And my second question is on Egypt. To what extent Egypt could sustain its financial stability amid the ongoing conflict? Thank you so much. Thank you. Anybody else on a similar issue? No. Okay. So we'll take this and then go back to you. Yeah, of course, the Middle East is in the center of the conflict. And a number of countries in the Middle East have been impacted directly by the war. So, again, it depends a lot on whether you're an energy importer, an energy exporter, whether you're directly impacted by the war. So we see quite a bit of heterogeneity across countries. You know, one of the key questions is how lasting the damage is to infrastructure. And, you know, when we look at market pricing across the Middle Eastern region, we do certainly see that inflation expectations are up. You know, stock markets are down to some degree. But we also see policymakers take decisive action in order to inject liquidity into the financial system. We have seen that in a number of Middle Eastern countries in order to basically support financial system functioning. You know, in terms of immediate threats, as I said earlier, the key question is the length and the duration and the magnitude of oil price developments and the war in the Middle East going forward. And, you know, it's too early to say where we are going to end up with this in this respect. On the questions about dollar bond issuance of the region, I'll just make a general observation in line with what Tobias said. I think the various support rolled out in the banking sector has helped invest the sentiment. EM spreads in general has widened by a modest amount, 30 to 40 basis points. And importantly, it does not seem like that countries are being locked out of issuing dollar bonds. So this is all very positive backdrop. Now, of course, the conflict may turn in various ways that would, you know, make this outcome different. But I think this also reflects the fact that, you know, many countries have fairly sound fundamentals, at least in the Middle East, you know, coming into this conflict. And I believe I answered the Egypt question before. Thank you. So we go to the gentleman over here in the front. Thank you very much, Hugo Dixon, Reuters. I have a question about Russia. There has been an increase in bad loans in the Russian banking system that are connected with the war and government directed war loans. So my question is, how serious do you assess the vulnerability in the Russian banking system? And also coming on to this question of policy space, how much policy space do you think that the Russian government has to respond to such vulnerabilities? And has the increase in the oil price actually increased its policy space to respond to any vulnerabilities if they should emerge? Thank you. Yeah, so, you know, we we have not, we do not have a granular assessment of the bank system in Russia at this point. There will be a regional press briefing on Europe where you can ask more specific country questions. So I don't know, do you want to say something on Russia? Maybe just very quickly on policy room. Fiscal policy room has diminished in Russia. And we are cognizant of the fact that, you know, non-performing loans in the banking sector is risen. That said, as Tobias said, you know, we need to do a more granular assessment on this topic. And maybe our regional colleagues can answer your question better. But from our understanding right now, the non-performing loan remains at a fairly moderate level. And so perhaps there are certain banks that, you know, would paint a different picture. But overall, this is what we see right now. Yeah, again, if you have any very specific regional questions, we have regional briefings coming up and happy to guide your questions there. We'll take the lady over there and then the lady here. So the two ladies up front. All right. Good morning. I'm Nancy Najib from AIT Nigeria. I would like to ask a question on Africa in terms of how the ongoing world will readjust perhaps foreign portfolio inflows into the country. Let me also stick this in Nigeria. Nigeria just concluded a banking recapitalization. I'm sure you know that. What do you think or what's also the guidance in terms of how vulnerable Nigerian economy is in terms of foreign capital and if the bank recapitalization now would help? Thank you. Thank you. Are there any other questions on Africa emerging markets? There's another question there and here. Good morning. My name is Babacar from Senegal. As you can notice in our country, we are facing a real challenge when it comes to debt stabilizing and our debt and ratio of debt GDP is up to 118 to 132 percent. That's huge. So what's the IMF is doing right now to help our government to try to mitigate the challenges that the Senegal government are facing? Thank you. Again, it is very country specific questions. We do have regional briefings coming up. But if it's general banking, Africa right here in the front. Good morning. Balisa from CNBC Africa. I'm based in South Africa in Johannesburg. What policy trade-offs are emerging markets facing right now between supporting growth and maintaining financial stability, especially given we are in a higher for longer interest rate environment? Thanks. Any other questions on emerging markets? The lady up there. Thank you. Karishma from Business Today India Today Group. I'll get you to the APAC region. Well, you've already spoken about the impact on emerging markets. And the fact that oil prices have already been elevated, dollar is strengthening. Which Asia Pacific economies do you think are the most vulnerable to balance of payments or refinancing stress if the conditions worsen? Thank you. So we'll take this round. Yeah, thanks so much. So let me start with some of the questions and then also ask Jason to compliment me. So starting with the capital flow question to sub-Saharan Africa. You know, when we are looking at capital flows since the beginning of the war in the Middle East and compare that to previous episodes of conflict, we do see a sort of outsized reaction in terms of capital flows. But at the same time, so for example, it's roughly twice as large as what we have seen during the Ukraine war or the first couple of months of the Ukraine war. But when we look at the price action, the price action remains fairly contained. So yes, there is a large reaction on quantities of capital flows, but the price reaction to date is fairly contained. And that really reflects a broader healthy risk appetite in global markets. So as I mentioned earlier, we've seen an ebb and flow in terms of risk appetite. But overall, I would characterize the risk appetite as being fairly healthy. Concerning bank recapitalizations, of course, it's in times of stress where the value of bank capital really comes to the fore. So what we are aiming at for global financial stability is a banking sector that is capitalized against adverse shocks. So yes, bank recapitalizations are very welcome and are paying off particularly under times of stress. Concerning debt to GDP and what the IMF is doing, so in sub-Saharan Africa, we have many countries with programs. So we're working actively with governments to address debt situations and across different countries this takes different shapes and forms. But debt sustainability and the fiscal position is certainly very foundational in our programs. Turning to the question from South Africa on policy trade-offs, so I think South Africa faces similar trade-offs as other emerging markets. Basically, you have this adverse supply shock where inflation expectations are driven up. Inflation realizations already are higher because oil prices are higher, energy prices are higher. But at the same time, real activity is driven down, and so central banks have to carefully evaluate to what extent the lower real activity might dampen inflation over time, to what extent the impact on inflation is temporary or more permanent, and of course what inflation expectations are doing. Turning to the question from Asia and the APEC countries in particular, you know, we see vulnerability, of course, particularly in countries that are dependent on oil imports and on food imports as well. So really, it's the most vulnerable countries are the ones that tend to be lower income countries. So, you know, there are some in Asia as well, and, you know, it's the most vulnerable countries that tend to be hit the hardest with this kind of shock. And within those countries, you know, macro policies for stability are important, but it's also first order to protect the most vulnerable among the population that are hit by the higher food and energy prices. Maybe just to quickly complement on two aspects, one is debt and capital flows, and the second is, you know, the picture in Asia Pacific. On capital flows, as Tobias mentioned, I think the medium term issue is more reliance on debt than FDI and equity. If you look at the across emerging markets, those emerging markets with better fiscal positions generally have more access to international markets and lower debt spreads. So this counsels us to continue to make improvement on that front in order to guard against sudden capital outflows and over reliance on debt. Secondly, on Asia Pacific, I think it's fair to say that financial markets in Asia Pacific is generally very deep. And so, so far during this episode, we have not seen really acute stress in any of the financial market segments. There have been pronounced exchange rate movements, but those appear to be managed in an orderly fashion. Thank you. Thank you, Jason. The gentleman over there. Thank you. Alex from the Daily Mail. Your report highlights again the expansion of shadow banking, credit outside the banking system, private credit. We've seen a number of fractures in those markets in recent days. Blue Owl has been mentioned. People have talked about cockroaches. We've seen a number of the big banks gate exit from their funds. Do you fear that we could be on the verge of something similar to new 2008 when there's a cascade of money moving around and causing failures in the financial system? And could the Middle East war perhaps be the kind of shock or trigger which could make that much worse? Thank you. Any other questions on private credit? Private credit? Hi, Paul Blake from AFP. Just wondering if you see it as a contained risk or if you see it spilling out into a broader risk as private credit? Another question on private credit? Hi, Sabrina Escobar with Barron's. I was just also wondering to piggyback on this. Are there any markets that you see especially at risk with private credit? And the report also mentions that in themselves if defaults were to get higher in response to the Middle East conflict, that would be a real problematic sign. But what would make you start worrying more about private credit risk and which markets are more at risk? And also just on private credit, we got some more questions online. One is do you see any systemic risk from private credit? Is the wealth effect a potential issue for the global economy here now that stocks have stopped moving higher? This is from Greg Robb, another one is it appears that US insurers are particularly exposed to the risks of private debt and leverage in business development companies. To what extent could this constitute a contagion or systemic risk for other asset classes? Yeah, so let me start by pointing out that we have quite a bit of analysis of private credit in the Global Financial Stability Report. So I think it's very worth taking a look at that. So let me make three points. So the first one is about the broader credit cycle. So one question is, if we did see a deterioration globally in the credit cycle, that would impact private credit, but also the loan books of banks and others. How much of a hit would private credit take? So in the GFSR, in the Global Financial Stability Report, we are looking at scenarios of a deterioration of private credit. And we are doing a fairly extensive analysis that is also described in one of the appendices. And that really shows that, of course, default rates would rise, just as they would rise in other credit classes as well. But we think that the magnitude is somewhat manageable. So default rates at the moment are perhaps between 2% to 3% under adverse scenarios that would go to 4%, 5%, or 6%. But that is probably digestible in and of itself. I think the second question is really about redemptions in private credit. So we have seen a number of funds that have received redemption requests. And so the total direct lending universe of private credit is about $2 trillion globally. We think about 15% or $300 billion of that is in semi-liquid structures, so where investors can redeem. But of course, the funds do have gates. So they can basically gate those redemptions. We have seen that in a number of vehicles. So this is something that is containing the systemic risk in this area. But if more of this sector were to become redeemable, that would certainly impact the broader assessment. But to date, we think that the systemic risk is certainly contained in the sector. And finally, there is the question about other financial institutions being exposed to private credit. So insurance companies, pension funds globally exposed to private credit. There's certainly some ownership. But we also think in the aggregate that's fairly manageable to date. I will add one point that there is no doubt that in recent years, private credit has supported overall credit growth, has supported the economy. So although the focus now is on risks in the sector, looking forward, it is important to also monitor the flows so that the sector will continue supporting the economy. Thank you. Thank you very much. So the lady over here. Thank you. Olena Hrašan, Kyiv Post. You mentioned that the price shock is short-term. On the other hand, the World Economic Outlook says that if hostilities end now in the Gulf states, they will need two years to recover. So I would like to clarify whether the IMF thinks this shock is long-term or short-term. And in the light of this, the European Central Bank has held the key rates and the Fed is currently, Jeremy Powell says that they don't know. So the question is whether the central banks are okay to hold the raising of the key rates this time, or will it be too late because there is a risk that it might be the repeat of the post-COVID reaction when they raised the key rates too late and then it cost us much more. Thank you. Any other questions on central banks? Any other questions on central banks and monetary policy? No. So we'll take that real quick and then we have a person waiting on Webex. Yeah, absolutely. So, you know, the way that the World Economic Outlook is treating the oil price shock is really to look at the three scenarios. So a reference scenario and an adverse and a severe one. And basically in the reference scenario, what you describe is what's happening is basically the inflationary impact is a temporary impact, right? In the adverse scenario, the inflationary impact is larger and more persistent. And then in the severe scenario, there could also be a financial conditions tightening, right? So there may be an impact not only directly on inflation, but also an outsized impact potentially on real activity. And so those three scenarios broadly map into central banking strategies. So under the reference scenario where you have a temporary oil price shock, you know, at that point, some central banks, you know, may want to look through that oil price shock, though it depends on what countries you're looking at. So for example, if you have an immediate impact on inflation expectations, you know, central banks may want to tighten even if they think that the oil price shock is temporary. But in those countries where inflation expectations are well anchored and you don't see pass through into co-inflation, you may want to wait. So the option value of waiting would be large in this reference scenario. In the more adverse scenario, where the inflation shock is more persistent and is of larger magnitude, at that point, we would expect central banks generally to hike in order to fulfill the inflation mandate. And then in the more severe scenario, it sort of depends on whether the real activity is outweighing the inflation shock. So it's going to become very country specific and very much dependent on how much of a drag the tightening of financial conditions is going to be on aggregate demand, you know, in addition to the adverse supply shock. Now, when you look at market pricing, and this is what I was referring to, when you look at market pricing, markets are generally pricing in a fairly temporary shock for the moment. You know, you can imagine that markets are sort of like averaging across those three scenarios. And our understanding from market pricing is that they put quite a bit of weight on the reference scenario at the moment. You know, our own forecast is really about those three scenarios, and we don't per se give a probability weighting at this point. Just to say that the key difference with 2092 is that back then demand was very strong. Now we're dealing with a supply shock. So it's a different case. Thank you. Okay, now we'll turn to Webex. Anthony Rowley from the South China Morning Post. Yes, can you hear me? Yes, we can. Good. Okay. Well, my question is of a more general nature, and that is this frequent reference now to the resilience of financial markets. But I wonder to what extent has this resilience become structural? What I mean by that is huge amounts of savings are channeled in via pension funds, life assurance companies, and so on, especially with the growth of ETF funds into investment. In other words, the markets are guaranteed, if you like, of huge cash flows into the market. So does this mean, in effect, that the markets are automatically replenished by these inflows, and therefore what we used to see are draining away from in times of crisis. It's just simply not possible now, simply because of the weight of, if you like, the rivers flowing into the lake. Thank you. Thank you for the question. Are there any other questions in a similar vein? No. Yes, and then we'll come to the room. And so we're running out of time, so we'll take this and then come to group questions in the room. Yeah, absolutely. So let me say something quickly and then turn to Thomas as well. You know, there's certainly ample liquidity globally. As I mentioned earlier, risk appetite is strong. So we have seen financial conditions tighten to some degree, but it's fairly contained by historical standards. And we haven't seen the sort of very sharp tightening at the moment. You certainly do see a reallocation of capital. But of course, that is the role that capital markets are playing, right? I mean, they are an insurance mechanism. So when adverse shocks are hitting, market prices adjust in order to rechannel capital in the right corners of the global economy. What I would also say, the way that stock markets have reacted to the recent shock is fully consistent with the energy price moves and the rates market repricing. So we don't see any dislocation from this point of view. And also, although risk appetite has been strong, as Tobias pointed out, growth has been surprising to the upside and earnings have been strong. Thank you. Now, we have just three minutes left. So if you can be very quick, the gentleman there, and then. We just have three minutes left. Walter Herrera, the George Washington University. Given Venezuela's large oil reserves, but severe financial institutional constraints, do you see a potential recovery in its energy sector as a stabilizing force for global energy markets or as a source of financial risk? Thank you. And then we'll take one last question. Yeah, my question is about the interbank transfer system, which is like a global public good, like maritime navigation, or whether that is internet or civil aviation, which are all governed by the UN conventions and have more democratic governance, unlike the interbank transfer system, which is controlled by just a few countries, and that is being held hostage to the geopolitical interest. So is that eroding the trust of the countries in that system? And will it lead to one not only lack of trust, but also the fragmentation of the system? How much is that risk to the global financial stability? And one very quick question on unregulated cryptocurrency, which is becoming a storehouse of corrupt and criminal money, and is also becoming a source of terror financing. Is that also a huge risk to your financial stability? We have space for one last question, I'm afraid, right there, and then we're going to have to wrap it up. I'm sorry. Quick one, Su-Chan from Telegraph. Do you think hedge funds increasing involvement in the government bond markets is an issue? On the one hand, they help with market functioning. On the other hand, we've seen what happens when their bets go wrong. Would you like to see more central clearing or haircuts? Yes, all right. Thanks so much for these very interesting questions. So on Venezuela, I would again defer to the regional press briefings. We are not really prepared to answer very country-specific questions unless they're directly related to global financial stability. Now, returning to the global payment system, so indeed there are a number of ways in which payments flow across borders, and I would distinguish here between clearing and settlement, right? So clearing systems are oftentimes quite integrated, but settlement systems are quite dispersed across the globe. There are many initiatives across the world to innovate on global payment systems. Some of that is using traditional account-based payment systems. Others are more tokenized systems that are emerging, many of which are developed either by private actors such as banks, including correspondent banks, other global banks, but also fintech payments providers. And of course, central banks are also very actively involved in terms of improving cross-border payment systems. So I would say at the moment, we do see the messaging system, which is part of clearing, right? It's the messaging. There is a pretty broadly used system, but there are certainly other systems as well that are emerging. And on settlement, we see quite a bit of fragmentation, but also a lot of innovation in terms of having faster and cheaper systems. Now, the integrity of payments is absolutely key from a policy perspective. So this is what we call anti-money laundering and counter-terrorist financing initiatives. So all countries in the world are very focused on making sure that global payments are legal and compliant. And that includes, of course, also the crypto world. We have put out a policy framework for crypto assets. Many countries are being supported by us, by the World Bank, and by international standard-setting bodies in terms of phasing in regulatory and policy frameworks for crypto assets. And making sure that they are compliant and legal is certainly very first order for countries. So I think that's a very active policy area. Now, finally, coming to the role of hedge funds. So as you know, global debt to GDP has been trending up around the world. Many countries have increased their debt. They have run expansionary fiscal policies in recent years, starting with the global pandemic. And really, over the past 15 years, we have seen an outsized role of non-banks in terms of absorbing the supply of sovereign debt globally. And so that's a very positive development for governments, because they are biased for this debt. But of course, there are some fragilities in those markets. So governments in the UK, in the US, and many other countries have been very focused on enhancing market structure. So, for example, via central clearing, by introducing new backstops by the central banks to make sure that government bond markets are resilient to adverse shocks, and that they are resilient to this changing nature of the marginal investor in the space. Thank you. Thank you, Tobias. I'm afraid we've run out of time. But if you have any follow-up questions, please feel free to follow up with me, and we are happy to help you. Again, thank you for coming.