Bangkok:IMF researchers have identified new indicators that reveal financial pressure risks affecting savers.
According to Thai News Agency, these indicators were presented at the 2026 IMF-World Bank Group Annual Meetings by Neil Shenai from the IMF's Strategy, Policy and Review Division. His research, titled "The Coming Great Repression? New Measures and a Century of Evidence," introduced two new methods to evaluate financial repression. This involves assessing the disparity in government bond holdings between financial institutions subject to regulatory requirements and those without.
Mr. Shenai explained that financial repression diverts savings from the financial system to support government borrowing at reduced costs. This often involves regulatory pressure on financial institutions to hold government bonds below market yields, resulting in a transfer of resources from savers to the government, potentially impacting private sector credit and investment.
The study noted an increase in financial pressure post-global financial crisis, linked to regulatory measures for financial stability, such as quantitative easing. These measures have increased demand for government debt, with side effects including a rise in government debt holdings by financial institutions.
The research also found a correlation between financial pressure and higher public debt levels, while private sector lending and investment tend to decline. Countries with low economic growth and lacking credible fiscal plans face higher risks of needing such monetary measures, whereas those with robust growth and clear fiscal strategies are less vulnerable.
Mr. Shenai emphasized that while another major financial crisis is not imminent, policymakers can mitigate risks by fostering economic growth, implementing reforms, and building consensus for fiscal policy rebalancing. The ultimate cost of financial repression, he noted, falls on savers as financial institutions' capital is tied to public assets.
The study, utilizing data from 17 developed economies since 1920, was published in the IMF Working Papers series. It represents the researchers' findings and opinions, not the IMF's official stance.