## Uphill Capital Flows and the International Monetary System

_IMF Working Papers, July 26, 2017_

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**Canonical URL:** [Uphill Capital Flows and the International Monetary System](https://www.imf.org/en/publications/wp/issues/2017/07/26/uphill-capital-flows-and-the-international-monetary-system-45113)

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## Bibliographic details
- Authors: Balazs Csonto, Camilo E Tovar Mora
- Published: July 26, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484311424.001

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### Research question and approach
- 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).

### Key empirical findings
- 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.

### Policy scenarios and implications
- Global policy options considered include:
  - A composite global reserve asset.
  - Global liquidity facilities.
- 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 and keywords (as stated in the source)
- 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, IMF Working Papers 2017, 174 (2017).*

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_Source: https://www.imf.org/en/publications/wp/issues/2017/07/26/uphill-capital-flows-and-the-international-monetary-system-45113_