The Futures Industry Association issued a statement today from FIA president John Damgard welcoming the International Monetary Fund’s findings in its World Economic Outlook that financial speculators are not to blame for volatility in the commodity markets.
“The IMF has wisely highlighted the important role that financial speculators have played in providing liquidity to commodity markets. As the IMF report says, recent research has not uncovered a ‘smoking gun’ pointing to speculators. It is prudent of the IMF to recognize there is not enough evidence to support urgent policy intervention.”
In its latest World Economic Outlook, which was released on Sept. 20, the IMF included a section addressing the arguments that increased speculation in the commodity derivatives markets caused the commodity price boom of 2003 to 2008. The IMF reviewed the evidence and concluded that commodity market fundamentals explain the price changes. It also concluded that investment inflows have added to market liquidity, which generally enhances rather than distorts price discovery.
The FIA is the primary industry association for centrally cleared futures and swaps. Its membership includes the world’s largest derivatives clearing firms as well as derivatives exchanges from more than 20 countries. For more information, please contact Will Acworth (wacworth@futuresindustry.org) or visit our website at www.futuresindustry.org.
