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on International Finance |
| By: | Fernando Broner; Tatiana Didier; Sergio L. Schmukler; Goetz von Peter |
| Abstract: | Using country-to-country data, this paper documents a set of novel stylized facts about the rise of the South in global finance. The paper assembles comprehensive bilateral data on cross-border bank loans and deposits, portfolio investment in debt and equity, foreign direct investment, and international reserves. The main finding is that global financial integration with and especially within the South (countries outside the G7 and Western Europe) has grown faster than within the North. By 2018, the South accounted for 24 to 40 percent of international loans and deposits, portfolio investment, and foreign direct investment, an increase of roughly 10 percentage points since 2001. The growing importance of the South is reflected in the intensive and extensive margins, with fast growth in the number of bilateral links. Although China weighs heavily in these trends, international investment in the rest of the South has increased to a similar extent. |
| Keywords: | International Capital Flows, emerging economies, international financial integration, Foreign Direct Investment, portfolio investment |
| JEL: | F21 F36 G15 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1226&r=all |
| By: | Fernando Eguren Martin (Bank of England); Mark Joy (Bank of England); Claudia Maurini (Bank of Italy); Alessandro Moro (Bank of Italy); Valerio Nispi Landi (Bank of Italy); Alessandro Schiavone (Bank of Italy); Carlos van Hombeeck (Bank of England) |
| Abstract: | This paper studies the sudden stop in capital flows that emerging markets have experienced throughout the first months of the pandemic. First, we find that the sudden stop in capital flows has been strongly affected by lower portfolio investments of non-bank financial intermediaries: for many emerging markets, the magnitude of the sudden stop has exceeded that of the Global Financial Crisis. Second, we show that emerging markets have adopted expansionary fiscal and monetary policies to face the sudden stop and the resultant recession; moreover, the use of macroprudential measures and unconventional monetary policy document a wider policy toolkit, compared to other crises. Third, we estimate the adequacy of current IMF resources if emerging markets were hit by a further global sudden stop: we find that the IMF resources are adequate, in case of a moderate sudden stop; in case of a more severe scenario, financing needs of emerging markets could go beyond the IMF’s lending capacity, even after the other layers of the global financial safety net have been deployed. |
| Keywords: | International Finance, International Financial Data, Foreign Exchange Reserves, Capital Flow, IMF |
| JEL: | F31 F32 F33 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_589_20&r=all |
| By: | Gustavo Adler; Camila Casas; Luis M. Cubeddu; Gita Gopinath; Nan Li; Sergii Meleshchuk; Carolina Osorio Buitron; Damien Puy; Yannick Timmer |
| Abstract: | The extensive use of the US dollar when firms set prices for international trade (dubbed dominant currency pricing) and in their funding (dominant currency financing) has come to the forefront of policy debate, raising questions about how exchange rates work and the benefits of exchange rate flexibility. This Staff Discussion Note documents these features of international trade and finance and explores their implications for how exchange rates can help external rebalancing and buffer macroeconomic shocks. |
| Keywords: | Currencies;Exchange rates;Exports;Depreciation;Imports;SDN,currency pricing,financing currency,Colombian peso,currency financing,expenditure switching |
| Date: | 2020–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfsdn:2020/005&r=all |