Capital flows
PBoC targets stability ahead of party congress
China's central bank has taken several measures to boost stability in the run-up to the Communist party congress, which starts on October 18
EMs should work to avoid ‘macro-prudential war’ – BIS article
Use of macro-prudential policies should be co-ordinated internationally for maximum effect, say Luiz Pereira da Silva and Michael Chui
Fed paper calls for rethink of conditions for setting capital controls
Policymakers should also consider how external shocks affect the borrowing capacity of the country, researchers say
PBoC dials back on forex controls
Renminbi ends 11-day rise after the central bank relaxes reserve requirements; analysts view move as attempt to end one-way trading
Paper challenges Rey’s ideas on global financial cycle
Cerutti, Claessens and Rose contest idea that capital flows are mainly the result of common shocks or developments in the US
Philippines sees strong ‘hot money’ inflow despite currency weakness
Net inflow of foreign portfolio investments into Philippines hits six-month high, in contrast to weakness in peso
BNM governor warns global bodies against ‘one-pill-cures-all’ mindset
Wealth of information from multilateral institutions has aided decision-making, but narrow definition of the ‘right’ policies could lead to worse outcomes, Muhammad Ibrahim says
ECB’s Cœuré says asset purchases are not responsible for exchange rate movements
Executive board member says Europe’s asset purchase programme has boosted economic growth and inflation prospects; policy not “fundamentally different” from conventional policy
Any London forex trading move would be ‘gradual’ – ECB
City’s place in global submarine cable network is likely to be key, researcher says
BIS comes to the defence of globalisation
Increasing trade and financial integration have had a “profoundly positive” impact on people’s lives, but do bring drawbacks too; the correct response is not a wholesale rollback, says Jaime Caruana
Some outflows from China may have been ‘disguised’ – Fed paper
China’s success reducing current account surplus may partly have been due to financial outflows disguised as “travel”, Fed economist finds
Obstfeld and Taylor back dual trilemma global finance theory
Economists still need to better incorporate financial stability into their thinking, the authors argue, with the concept of a financial trilemma helping to explain recent instability
BNM’s Ibrahim urges Asia to “re-engineer” global monetary system
Countries should reduce their reliance on the US dollar and promote a “multi-currency market” within Asean, says Muhammad bin Ibrahim
Banking flows affected by ‘Anna Karenina principle’ – paper
All healthy credit relationships are alike, but each unhealthy credit relationship is unhealthy in its own way, the study explains
Illicit capital flows a problem for countries without capital controls – Mminele
Mminele explains how capital controls benefited cross-border flow monitoring; Sarb deputy calls for a “more consistent” approach to capital flow management
Worst could be yet to come, warns Sarb
Further credit downgrades could result in further outflows of investment in South Africa, threatening the strength of the rand and overall financial stability; governor Kganyago says central bank will work to avoid more volatility
China’s NPL problem has ‘stabilised’ – PBoC’s Yi
Deputy governor says non-performing loans are “pretty much stabilised” and capital outflow pressures have declined
Thinking on global capital flows is muddled – BIS’s Shin
BIS head of research says policies to guard against excess global liquidity should look at underlying causes, not symptoms such as capital flows; Fed’s Fischer acknowledges policy spillovers
Singapore to work with China on capital market development, MAS’s Loh says
“Wider suite” of risk management tools needed to stem risks rising from capital market liberalisation; opportunities to coordinate on other Chinese initiatives
IMF paper examines impact of China’s new growth model on sub-Saharan Africa
Chinese rebalancing does not have to negatively affect sub-Saharan Africa, paper says; high commodity prices were not the “determining factor” behind region’s strong growth
BoJ builds on BIS banking statistics
Researchers break down the statistics further, shedding new light on patterns of cross-border banking
Brazil can no longer rely on consumption for growth – paper
IMF paper highlights need for Brazil to switch to investment-led growth model as infrastructure caps threaten productivity and competitiveness
Iceland lifts capital controls
Controls on individuals, firms and pension funds lifted, though the central bank will retain controls on inflows to resist carry trade
IMF paper offers new ways of measuring capital flow volatility
Authors say more granular dataset and three different methods of calculating capital flow volatility allow them to gain new insights