Capital flows
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
Netherlands paper exposes differing capital flows across EMU
Paper examines the mechanism behind divergence of north and south eurozone members, as capital flows caused external imbalances to move in opposite directions
Macro-prudential policy can guard against global volatility – BoE paper
Tighter macro-prudential policies appear to reduce the sensitivity of capital flows to global volatility, paper finds
Macro-prudential rules must be reciprocated – Shafik
“Leakages” will reduce the effectiveness of macro-prudential policy if countries do not reciprocate changes in countercyclical buffers, BoE deputy warns
Blanchard and Acalin warn of FDI measurement problems
Measured foreign direct investment is not as long term as generally thought, often reflecting transient capital flows and responding to US monetary policy, economists find
Frontier markets need framework to strengthen capital flow resilience – IMF paper
Frontier markets are affected by capital flows in similar ways to emerging markets, the paper argues, suggesting a change in the “landscape” of capital flows could have policy implications
Icelandic paper finds ‘striking’ ties between financial cycle and real economy
Authors identify strong financial cycle linked to global factors, which impacts macro variables including consumption and government spending; paper suggests range of policy responses
‘Still some flaws’ in transmission mechanism – Icelandic report
Monetary policy report says capital flow measures have not yet had as much of an impact as intended, with the yield curve stubbornly staying flat
IMF’s Lipton stresses importance of multilateralism
IMF first managing director calls for co-operation between emerging markets and advanced economies to help foster growth in the wake of Brexit
LatAm policy-makers were possibly ‘excessively optimistic’ over economic potential, BIS paper says
Downplaying commodity super-cycle may have led to incorrect assessment of economic potential in Latin America, paper says; may have skewed monetary and fiscal policies
Lipton: co-ordinated approach to capital flows ought to be considered
IMF first deputy managing director says it is time for ‘new generation of reforms’; capital flow reversibility has costs as well as benefits
Capital flow measures needed before offshore krona auction, says Guðmundsson
If the currency auction goes to plan, inward flows could strengthen and the Central Bank of Iceland needs the tools to resist them, its governor says