{
  "title": "Uphill Capital Flows and the International Monetary System",
  "publication": "IMF Working Papers, July 26, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/07/26/uphill-capital-flows-and-the-international-monetary-system-45113",
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  "summary": "Uphill capital flows constitute a key transmission channel through which reserve accumulation can distort the stability of the international monetary system. This paper examines and quantifies the importance of this transmission channel by examining how foreign official purchases of U.S.",
  "sections": [
    {
      "heading": "Research question and approach",
      "content": "- Examines and quantifies how foreign official purchases of U.S. Treasuries influence the U.S. yield curve at different maturities.\n- Uses estimated effects on the term premium to gauge the role of global policies that reduce excess reserve accumulation (for example, a composite global reserve asset or global liquidity facilities)."
    },
    {
      "heading": "Key empirical findings",
      "content": "- A percentage point increase in foreign official holdings relative to outstanding marketable securities reduces the term premium by 2.0–2.4 basis points at maturities of 2–3 years.\n- A policy that reduces the demand for Treasuries by $100 billion would increase yields by 1.5–1.8 basis points."
    },
    {
      "heading": "Policy scenarios and implications",
      "content": "- Global policy options considered include:\n  - A composite global reserve asset.\n  - Global liquidity facilities.\n- Quantified channel: reducing reserve accumulation can meaningfully affect Treasury yields via changes in foreign official demand, with the $100 billion demand reduction mapped to a 1.5–1.8 basis point rise in yields."
    },
    {
      "heading": "Subjects and keywords (as stated in the source)",
      "content": "- Subjects: Balance of payments, Capital flows, Central banks, Financial institutions, Financial services, International reserves, Reserves accumulation, Securities, Yield curve.\n- Keywords: Capital flows, foreign exchange, foreign holdings, Global, International reserves, premium, reserve accumulation, Reserves accumulation, Securities, term premium, Treasuries, Treasury securities, U.S. Treasuries, Uphill capital flows, WP, yield curve, yield dynamics.\n\nUphill Capital Flows and the International Monetary System, IMF Working Papers 2017, 174 (2017).\n\n---\n\n Content in this bundle\n\n- Uphill Capital Flows and the International Monetary System, WP/17/174, July 2017\n  - Uphill Capital Flows and the International Monetary System, WP/17/174, July 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Uphill Capital Flows and the International Monetary System, WP/17/174, July 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/07/26/uphill-capital-flows-and-the-international-monetary-system-45113"
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    "Authors: Balazs Csonto, Camilo E Tovar Mora",
    "Published: July 26, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484311424.001",
    "Examines and quantifies how foreign official purchases of U.S. Treasuries influence the U.S. yield curve at different maturities.",
    "Uses estimated effects on the term premium to gauge the role of global policies that reduce excess reserve accumulation (for example, a composite global reserve asset or global liquidity facilities).",
    "A percentage point increase in foreign official holdings relative to outstanding marketable securities reduces the term premium by 2.0–2.4 basis points at maturities of 2–3 years.",
    "A policy that reduces the demand for Treasuries by $100 billion would increase yields by 1.5–1.8 basis points.",
    "Global policy options considered include:",
    "Quantified channel: reducing reserve accumulation can meaningfully affect Treasury yields via changes in foreign official demand, with the $100 billion demand reduction mapped to a 1.5–1.8 basis point rise in yields.",
    "Subjects: Balance of payments, Capital flows, Central banks, Financial institutions, Financial services, International reserves, Reserves accumulation, Securities, Yield curve.",
    "Keywords: Capital flows, foreign exchange, foreign holdings, Global, International reserves, premium, reserve accumulation, Reserves accumulation, Securities, term premium, Treasuries, Treasury securities, U.S. Treasuries, Uphill capital flows, WP, yield curve, yield dynamics.",
    "**Uphill Capital Flows and the International Monetary System, WP/17/174, July 2017**"
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