Global Liquidity through the Lens of Monetary Aggregates

Author/Editor:

Kyuil Chung ; Jong-Kun Lee ; Elena Loukoianova ; Hail Park ; Hyun S Shin

Publication Date:

January 24, 2014

Electronic Access:

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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:

This paper examines how the financial activities of non-financial corporates (NFCs) in international markets potentially affects domestic monetary aggregates and financial conditions. Monetary aggregates reflect, in part, the activities of NFCs, who channel capital market financing into the domestic banking system, thereby influencing funding conditions and credit availability. Periods of capital inflows are also those when the domestic currency is appreciating, and such periods of rapid exchange rate appreciation coincide with increases in the central bank’s foreign exchange reserves, increasing the stock of narrow money. The paper examines economic significance of cross-country panel data on monetary aggregates and other measures of non-core bank liabilities. Non-core liabilities that reflect the activities of NFCs reflect broad credit conditions and predict global trade and growth.

Series:

Working Paper No. 2014/009

Subject:

English

Publication Date:

January 24, 2014

ISBN/ISSN:

9781475514551/1018-5941

Stock No:

WPIEA2014009

Pages:

49

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