Central banks may have to become ‘dealers of last resort’ – BIS economists
Central banks have had to innovate rapidly in the face of the coronavirus pandemic. The latest innovation may see some becoming “dealers of last resort”, economists at the Bank for International Settlements say.
Boris Hofmann, Ilhyock Shim and Hyun Song Shin say some emerging market economy (EME) central banks may find defending their currencies using foreign exchange reserves is not enough to fight capital outflows and a destabilising currency depreciation.
“In particular, they may need
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