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Dear maria, Welcome to the Weekend Read! In today's edition we look at how the tightening of US monetary policy can have an effect in emerging economies, crypto prices and the stock market, vaccine production in Africa, what is necessary for a healthy society, and a positive trend for shipping rates. Spillovers (Photo: TOBIASJO/iStock by Getty Images) Emerging Markets and Fed Tightening Monetary policy actions in one of the world's largest economies can have a ripple effect around the globe. In a new blog, the IMF's Stephan Danninger, Kenneth Kang and Hélène Poirson explain how emerging economies must prepare for the effects caused by the US Federal Reserve's move to increase interest rates and taper asset purchases as inflation rises. The "spillover" caused by a tightening of US monetary policy could be benign if its gradual, well communicated and is in response to a strengthening recovery. But if the Fed moves faster or more aggressively to contain inflation, it could rattle financial markets and tighten financial conditions globally. For emerging markets, this could lead to capital outflows and currency depreciation, the authors write. --Difficult tradeoffs: Emerging markets are already facing difficult policy tradeoffs between addressing rising debt and inflation or supporting a recovery. In response to tighter funding conditions, emerging markets should tailor their response based on their circumstances and vulnerabilities.  Watch IMF Managing Director Kristalina Georgieva discuss how the Fed's monetary policies could impact emerging markets. "So far the risk of spillover impact on other countries is being mitigated. It is, though, something we are concerned about," she said this week on CNBC. Crypto (Photo: DA-KUK/iStock by Getty Images) Crypto Prices More in Sync with Stocks As crypto assets continue to expand, their correlation with traditional holdings like stocks has increased significantly, raising the risk of contagion across financial markets, according to a new blog by Tobias Adrian, Tara Iyer and Mahvash S. Qureshi. Prior to the pandemic, crypto assets such as Bitcoin and Ether showed little correlation with major stock indices. In fact, they were thought to diversify risk and act as a hedge against swings in other asset classes. But this changed after the extraordinary central bank crisis responses of early 2020: Crypto prices and US stocks both surged amid easy global financial conditions and greater investor risk appetite. --A risk to financial stability: Given the relatively high volatility and valuations of crypto assets, their increased co-movement could soon pose risks to financial stability especially in countries with widespread crypto adoption. It is thus time to adopt a comprehensive, coordinated global regulatory framework to guide national regulation and supervision and mitigate the risks stemming from the crypto ecosystem, the authors conclude, drawing on the findings of a recent global financial stability note. Vaccines (Photo: Bruno DEMÉOCQ/ IMF Photos) Supporting Africa's Vaccine Production Africa remains reliant on COVID-19 vaccine imports and donations. Meeting this demand and bringing the pandemic under control in the region is key to ending the crisis worldwide. But efforts to meet urgent needs should not come at the expense of supporting the region's ability to supply vaccines for itself, for this pandemic and future healthcare needs, IMF Managing Director Kristalina Georgieva writes in a new blog.  Without predictable and reliable vaccine supplies, for example, health authorities are often forced to react at short notice to accept doses, often with limited shelf lives, greatly complicating delivery logistics for already-stretched health systems. In short, true resilience in Africa cannot depend on the repeated generosity of the international community. It requires scaled-up local manufacturing capacity and strengthened regional supply chains, Georgieva writes. F&D (Art: John Jay Cabuay) Reflections on a Healthy Society The pandemic has raised questions about how we function as a society and what we should value as individuals. In our latest issue of Finance & Development, focusing on health and well-being, we hear from a diverse group of thinkers, policymakers, health experts, scientists, and academics--Michelle Bachelet, Jeffrey Sachs, K.K. Shailaja, Christian Happi, Kate Soper, and María del Rocío Sáenz Madrigal. They reflect on lessons learned from the pandemic as we seek to cultivate a more resilient world. Read the entire article. Check out our December Issue of Finance & Development.  Want to get a print copy delivered to your home or office? Click here to subscribe.   (Photo: IMF)   IMF Podcast: Africa's Public Finance In a new IMF Podcast, Georgetown University's Ken Opalo talks about what's at stake for African countries if they don't give the public more of a voice in public spending. (Photo: IMF)   A Slower Recovery The latest COVID wave is expected to slow the pace of global economic recovery, IMF Managing Director Kristalina Georgieva said in her first interview of the year with The National newspaper. In a separate CNN interview, she also said to expect supply chain disruptions to continue in 2022 and likely into 2023. (Photo: IMF/Joshua Roberts)   Essential Reading: Capital Flows Read a compilation of IMF research on the many aspects of capital flows. In our eLibrary section you can access all the latest papers on these topics.   Quote of the Week "Africa vaccinating Africa is necessary—and it is achievable." —IMF Managing Director Kristalina Georgieva, in her latest blog on scaling up vaccine production in Africa. WEEKLY ROUND-UP 01. IMF Support in 2022 IMF Managing Director Kristalina Georgieva held a wide-ranging conversation with Center for Global Development President Masood Ahmed. The event focused on how the IMF will support emerging markets and developing countries in 2022. Georgieva discussed vaccines, debt, new financing instruments, climate change and the overall mission of the fund. 02. IMF Names New Chief Economist University of California-Berkeley Professor Pierre-Olivier Gourinchas will take over as the Fund's Economic Counsellor and Director of the Research Department, the IMF announced this week. He will replace outgoing Chief Economist Gita Gopinath, who will join the Fund's management team as First Deputy Managing Director. Gourinchas, a French national, has been at UC-Berkeley since 2003 and was previously an assistant professor at Princeton and Stanford Universities. He'll start in the new role on a part-time basis on Jan. 24 before transitioning to full time on April 1. 03. Global Partnerships for Africa and Gender Equality This week, the IMF announced a new capacity development partnership with Germany to support IMF regional centers in East and West Africa and Public Infrastructure Management Assessments on the continent. The IMF also hosted a partnership dialogue with Canada on gender equality ahead of the release of the IMF’s first-ever strategy on gender. Ratna Sahay, Senior Advisor on Advancing the Fund’s Gender Work in the Post-Covid Era in the Office of the Managing Director of the IMF, gave a preview of the Fund’s ambitious vision to apply “a gender lens” to all Fund core activities, namely surveillance, lending and capacity development. The IMF has already provided gender budgeting technical assistance to more than 120 countries worldwide. Shipping costs soared over the past year as consumers unleashed pent-up savings to buy new merchandise while the pandemic continued to snarl the world’s supply chains. Container rates have more than quadrupled since the start of the pandemic, with some of the biggest gains concentrated in the first three quarters of last year. Lockdowns, labor shortages, and strains on logistics networks led to shipping-cost increases and significantly lengthened delivery times, though those pressures are easing. Our latest Chart of the Week by the IMF's Parisa Kamali shows how global container rates began to pull back from their record in September and have since declined by 16 percent. Adam Behsudi Editor IMF Weekend Read abehsudi@IMF.org   Global container rates have begun to pull back from their record in September Dear maria, We just published a new blog—please find the full text below. Global Shipping Costs Are Moderating, But Pressures Remain (Photo: Pawinee/iStock by Getty Images) By Parisa Kamali Shipping costs soared over the past year as consumers unleashed pent-up savings to buy new merchandise while the pandemic continued to snarl the world’s supply chains. Container rates have more than quadrupled since the start of the pandemic, with some of the biggest gains concentrated in the first three quarters of last year. Lockdowns, labor shortages, and strains on logistics networks led to shipping-cost increases and significantly lengthened delivery times , though those pressures are easing. Our Chart of the Week shows how global container rates began to pull back from their record in September and have since declined by 16 percent, mostly due to falling rates for trans-Pacific eastbound routes, the main sea link from China to the United States. The drop indicates that strong goods demand is diminishing after the traditional peak shipping season, which is typically from August to October. In addition, the US recently ordered some ports to expand operating hours and boost efficiency to reduce congestion and ease supply bottlenecks. Although rates have subsided, they may remain elevated through the end of the year. Some underlying supply constraints do not have immediate fixes: backlogs and port delays, labor shortages in related occupations, supply chain disruptions moving inland, and shipping industry challenges such as the slow capacity growth and consolidation that concentrated the market power of a few carriers. On the other side, if the pandemic is controlled in the future, the demand for tradable goods might gradually decline as some service-providing sectors, such as travel and hospitality, recover. Higher shipping costs and goods shortages are expected to boost merchandise prices. The United Nations Conference on Trade and Development (UNCTAD) projects that if freight rates remain elevated through 2023, global import price levels and consumer price levels could rise by 10.6% and 1.5%, respectively. This impact would be disproportionately larger for small, developing islands which heavily rely on imports that arrive by sea. Higher freight rates will also result in larger increases in the final price of low-value-added products. Smaller developing economies that export many of these goods could become less competitive and face difficulties with their economic recoveries. Moreover, the final prices of products that are highly integrated into global value chains such as electronics and computers will also be more affected by higher freight rates. Returning to pre-pandemic shipping rates will require greater investment in infrastructure, digitalization in the freight industry, and implementation of trade facilitation measures. ******   We Want To Hear From You! 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