00:00I do want to start off first on just issuance that we've seen this year when it comes to emerging markets.
00:05And a lot less of that was dollar issuance, if my data is correct.
00:09So we have seen both hard currencies, so dollar issuance, other hard currency issuance, as well as local currency debt issuance.
00:16It's not a record year, but it's a very solid year to date.
00:19Why are we seeing more local currency issuance?
00:22So emerging markets, particularly the major emerging markets, have really worked on developing their local markets.
00:28They realize that that can be a shock absorber for various shocks, either from abroad or domestically.
00:35And a lot of progress has been made there.
00:38And what does demand look like on the investor side of things?
00:41When you think about sort of the shift here between hard and local currencies, I mean, how has that been received by the investment community?
00:49Yeah, so what major emerging markets has done is to really develop a buy side in their own country.
00:55So what you're seeing nowadays is a mix of global investors together with local investors.
01:02And what we are finding is that, you know, having those local investors alongside the global investors is really stabilizing the country.
01:10And why are we seeing that, that local investor base get built up here?
01:15So this is really policy work in the country.
01:18So the countries are developing insurance companies and pension funds.
01:22And so you have a rich trading environment.
01:26There are primary dealers.
01:27There are repo markets.
01:28All of these things that we are used to in advanced economies like the U.S.
01:32is happening more and more in major emerging markets.
01:35And it's really benefiting them.
01:36What does the economic fundamentals look like, particularly in light of some of the fractures that we've seen in global trade and or the traditional relationships in global trade?
01:47Absolutely.
01:48I mean, look at emerging market stock indices, right?
01:50We have seen a rally in EM stocks.
01:54You know, they're up, you know, about 24, 25 percent year to date.
01:58That's nearly twice as much as advanced economies.
02:00So that's, you know, really telling you where the market is assessing those countries.
02:05One issue that we've dealt with a lot over the years when it comes to people investing in emerging markets is the idea that when you start to see a country sort of start to get back on its feet, get its fiscal house in order, sometimes those changes end up being temporary.
02:18Either there's some sort of political upheaval that ushers them out.
02:22We're kind of seeing this play out now in Argentina, which, you know, it seemed like six months ago we were all praising some of the measures that they were taking.
02:28And now, you know, we're talking about potential bailouts by the United States.
02:32Well, I don't want to comment on on a particular country in this interview.
02:37But, you know, basically, you know, countries have been able to make the right choices and that is helping them in terms of stability and growth trajectory.
02:47But, of course, we have also seen countries making other choices.
02:51So it's really about having robust policy frameworks in place.
02:55I know you don't want to comment on a specific country, but it's hard to not talk about what's going on in France.
03:01And you just think about or political turmoil overall, how it's affecting certain countries, certain credits here.
03:08And I wonder, I mean, you take a look at the developed markets in contrast to the emerging markets and some of the success stories you have here.
03:16And I wonder what the balance looks like from where you're sitting.
03:18Yeah. So what I would say is that, you know, when we look at the global debt picture, you know, debt has been rising everywhere.
03:24And that's true in advanced economies and that's true in emerging markets.
03:28So we are in a world today compared to five or 10 or 15 years ago where debt levels, sovereign debt levels are that much higher.
03:37And that makes markets more sensitive and more fragile relative to any political news may be on the good side or the bad side.
03:47And we talk about these rising debt levels and I just always come back to the investor base.
03:51We already talked about how you're having a local investor community really get built up here, revitalized.
03:57Has that been at the expense of global investors coming into emerging markets or what's going on with that community?
04:04I wouldn't put it as a either or rather, you know, better market liquidity is benefiting everybody.
04:11And so having a better domestic investor base is increasing market liquidity domestically, which is also benefiting global investors.
04:20I do have to ask you just about the general role right now of the IMF in sort of facilitating some of those policy changes and more importantly, I guess, providing support for those policy changes.
04:34Is it still effective?
04:35Oh, absolutely. You know, we're working with all our 191 member countries to strengthen policy frameworks.
04:42In some countries, that's hands on technical assistance where we really try to help countries build more resilient and stronger and better governed institutions.
04:51In other countries, it's through surveillance and in some countries, it's through programs.
04:55So, you know, we're there to help the membership.
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