Emerging markets
Korean paper explores ‘divergent’ spillovers to EMs
Macro-prudential policies key to protecting emerging markets from spillovers, research says; normalisation in the US could lead to ‘renewed tensions’
Room for monetary policy stimulus has ‘narrowed’ in many EMs, World Bank report warns
Little room left to use monetary or fiscal stimulus in event of growth shock in some countries, report says, pointing to role for structural reform
BIS deputy warns all economies must manage ‘sudden floods’ of capital
Advanced economies face the same floods of capital as emerging markets, and may be hit by other spillovers that are not yet well understood, Luis Awazu Pereira da Silva says
BIS’s Shin highlights global liquidity dilemma for EMs
Head of research points to an uncomfortable balancing act among emerging markets exposed to foreign currency debt, which may be a factor behind the recent slowdown in their economies
Barbados paper identifies a ‘couple of gaps’ in central bank archives
Working paper calls for Central Bank of Barbados to implement fully inclusive digital database after 'gaps' in archival activities are identified
BIS: Artificial calm in markets cannot last
Quarterly review presents latest evidence of fault lines running through financial markets; Claudio Borio says tension between market behaviour and underlying conditions must be resolved eventually
Changing commodity prices can ‘cushion’ other shocks, Colombian paper says
Colombian working paper suggests commodity price fluctuations do not always amplify business cycles in emerging markets
Changing funding patterns cut both ways for emerging markets, central bankers say
Emerging markets are moving towards greater use of capital market funding, but while this could bring benefits for monetary policy, it also throws up a host of stability risks
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