Bank Recycling of Petro Dollars to Emerging Market Economies During the Current Oil Price Boom

Author/Editor:

Johannes Wiegand

Publication Date:

July 1, 2008

Electronic Access:

Free Full Text (PDF file size is 598 KB).Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

High oil prices have once again led to large external surpluses of oil exporting countries, similar to the 1970s and 1980s. This paper analyzes the extent to which (i) oil exporters use bank deposits to invest these surpluses, and (ii) banks are lending on these funds to emerging market economies. Bank recycling of petro dollars to emerging market economies is found to be almost as important as in the 1970s and 1980s, even though during the current boom, petro dollar bank flows tend to originate in countries like Russia, Libya, or Nigeria rather than in the Middle East. As one consequence, a fall in oil prices could yet again disrupt financing flows to emerging economies. Especially at risk could be countries that rely heavily on bank loans to finance external deficits, many of them in Emerging Europe.

Series:

Working Paper No. 08/180

Subject:

Frequency:

Monthly

English

Publication Date:

July 1, 2008

ISBN/ISSN:

9781451870381/1018-5941

Stock No:

WPIEA2008180

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

26

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