Emerging markets
Sarb’s Mminele fears a ‘lengthening drought’ in emerging market capital flows
Sarb deputy warns emerging market nations must maintain “utmost vigilance” as they are buffeted by the effects of divergent monetary policies and fears about the state of the Chinese economy
Emerging markets risk ‘quantitative tightening’, Caruana says
Problems now affecting emerging markets are a continuation of global problems, head of BIS says; response by policy-makers is too reactive and based on domestic circumstances
BIS statistics show sharp contraction in Q2
Cross-border claims fall significantly in advanced economies, led by euro-denominated transactions; credit to emerging markets is up quarter-on-quarter, but down year-on-year
Outlook for emerging markets not as ‘gloomy’ as people think, BoE’s Forbes says
Bank of England MPC member Kristin Forbes warns pessimism may be ‘overshadowing important differences across countries’ and strengths in some economies
Blanchard and others look to reconcile theory of capital flows with practice
Revamp of Mundell-Fleming model helps explain apparently contradictory results, with important implications for policy-makers looking to respond to capital flows
BoE turns attention to risk-free rate as markets push out expectation of hike
MPC mulling the question of whether lower rate expectations will provide enough stimulus to overcome growing risks from emerging markets; rates stay on hold
Emerging markets appear less susceptible to global contagion than advanced economies – BIS paper
Working paper explores whether central banks can still manage domestic financial conditions despite globalisation; isolates ‘contagion’ component in bond yield dynamics
IMF sees divergent risks in new outlook
IMF revises growth outlook for this year and next, while noting transformation in risks; Maurice Obstfeld discussed emerging market policy in anticipation of Fed hike
Value of capital controls still up for debate
Research published by BIS and IMF points to potential benefits from capital flow measures and macro-prudential tools, but other economists question the results
BIS paper uncovers new evidence on FX reserve and capital flow link
Paper argues role of domestic investors is key to properly understanding how foreign exchange reserves can dampen volatile capital movements
Credit growth has had significant impact on EM growth, IMF paper says
IMF paper explores relationship between the level and composition of credit growth and real GDP growth across 31 emerging market economies
IMF paper offers recipe for ‘de-dollarisation’
High levels of dollarisation in central Asia are contributing to macroeconomic instability, paper says; authors offer various options that could help reduce reliance on dollars
BIS paper finds emerging market corporations exploiting carry trade
Study of emerging market foreign currency-denominated bond issuance by Bruno and Shin finds corporations appear to be issuing bonds as part of a carry trade, rather than financing investment
Capital controls ineffective at handling policy trilemma, ECB paper finds
Emerging market capital controls have a limited impact on monetary policy trilemma variables and come with spillover effects, the authors warn
BIS researchers dissect emerging market fire sales
Working paper picks apart the channels through which asset management impacts on emerging bond markets, finding evidence of procyclical behaviour
Tenge plunges as Kazakhstan moves to free float
Pressure on currency forces central bank to abandon peg, although the government casts it as the next step in the shift towards inflation targeting
IMF paper: capital inflows work differently on credit for households and firms
The composition of capital inflows affects whether and how they cause credit growth, IMF working paper says
Bank of Canada paper flags risk of spillovers from emerging to developed economies
Researchers show how a search for safe assets could transmit instability to developed economies as capital flows out of emerging markets
BIS economists warn of emerging market policy dilemma
Emerging markets are increasingly exposed to monetary policy in developed economies, transmitted via lower long-run rates, and it is not clear what central banks can do about it
BoJ paper finds emerging markets struggled to protect themselves from QE
Foreign exchange interventions and capital flow policies did little to shield emerging markets from the spillovers caused by quantitative easing in the US
IMF laments lack of progress on global imbalances
Fund calls on both surplus and deficit economies to redress imbalances, arguing this would support global demand management and growth
Bank of Korea research tots up damage from capital flows
Researchers attempt to measure the impact of foreign financial flows on the real economy, finding the type of flow matters for growth, but all types increase volatility
Some emerging markets still dangerously exposed to dollar debt, IMF warns
Spillovers report underscores the importance of net/gross distinction, as improvement in net debt position provides fig leaf to some countries that may be overexposed to US dollar appreciation
IMF paper offers advice on Asian financial integration
Authors suggest improvements to the sharing of information, trade integration, capital market development and a common regulatory framework to improve financial integration in Asia