Global Liquidity Through the Lens of Monetary Aggregates

50 Pages Posted: 20 Feb 2014

See all articles by Kyuil Chung

Kyuil Chung

Institute for Monetary & Economic Research

Jong-Eun Lee

Sejong University - Department of Economics

Elena Loukoianova

International Monetary Fund (IMF)

Hail Park

Kyung-Hee University

Hyun Song Shin

Bank for International Settlements (BIS)

Date Written: January 2014

Abstract

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.

Keywords: Monetary aggregates, Corporate sector, International capital markets, Capital inflows, Liquidity, Exchange rate appreciation, Banking sector, Corporate deposits, money supply, offshore bond issuance, capital flows, debt securities, global capital markets, open capital markets, index options, hedging, securities markets, international capital flows, corporate bonds, capital market financing, corporate bond market, hoarding, subsidiaries, border capital flows, net capital, real effective exchange rate

JEL Classification: E51, F30, F33

Suggested Citation

Chung, Kyuil and Lee, Jong-Eun and Loukoianova, Elena and Park, Hail and Shin, Hyun Song, Global Liquidity Through the Lens of Monetary Aggregates (January 2014). IMF Working Paper No. 14/9. Available at SSRN: https://ssrn.com/abstract=2398862

Kyuil Chung (Contact Author)

Institute for Monetary & Economic Research ( email )

39, Namdaemun-ro, Jung-gu
Seoul, 04531
Korea, Republic of (South Korea)
82-2-759-5404 (Phone)
82-2-759-5420 (Fax)

Jong-Eun Lee

Sejong University - Department of Economics ( email )

Seoul, 05006
Korea, Republic of (South Korea)
+82-2-3408-3137 (Phone)

HOME PAGE: http://dasan.sejong.ac.kr/~jongeunlee/Prof._Jong-Eun_Lee/Main.html

Elena Loukoianova

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Hail Park

Kyung-Hee University ( email )

Hyun Song Shin

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

HOME PAGE: http://www.bis.org/author/hyun_song_shin.htm

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