What Do New Forms of Finance Mean for EM Central Banks?

423 Pages Posted: 24 Nov 2015

Date Written: November 2015

Abstract

Papers in this volume were prepared for a meeting of senior officials from central banks held at the Bank for International Settlements.

Financial intermediation in emerging market economies (EMEs) has been transformed over the past decade: a higher volume of bond financing has gone hand-in-hand with a growing internationalization of financial markets and significant changes to the balance sheets of banks. The 2015 Deputy Governor meeting examined three interrelated aspects of the new forms of financial intermediation in EMEs: (a) the role of banks; (b) the role of debt securities markets; and (c) implications of recent changes in financial intermediation for monetary policy.

One conclusion is that greater access of households to bank credit and of EME corporations to domestic and external bond markets is a double-edged sword. On the one hand, it has helped foster financial development, diversifying funding sources and reducing credit risk concentration. On the other hand, it has also been accompanied by increased risks and vulnerabilities - as the financial market turbulences of 2015 illustrated. Domestic bond markets now react more strongly to global forces. Larger foreign currency debt has made many companies more vulnerable to exchange rate shocks. Credit cycles have also become more pronounced. These developments raise questions about the appropriate instruments for EME monetary authorities as they seek to contain monetary and financial stability risks.

While the full publication can be downloaded using the above link, individual contributions are available separately.

BIS background papers:

What Do New Forms of Finance Mean for EM Central Banks? - An Overview

The Role of Banks

The Role of Debt Securities Markets

Changing Financial Intermediation: Implications for Monetary Policy Transmission

Contributed papers:

Changing Patterns of Financial Intermediation: Implications for Central Bank Policy

Long-Term Rates and the Term Premium: Evidence from Chile

Changes in Colombian Financial Markets Over the Past Decade

Changes in the Czech Republic's Financial Intermediation During the Last Decade

The Rise of Hong Kong's Corporate Bond Market: Drivers and Implications

Interaction between Monetary and Macroprudential Policies in Practice - a Hungarian Example

Indonesia: Changing Patterns of Financial Intermediation and Their Implications for Central Bank Policy

Financial Intermediation and the Transmission Mechanism: Learning from a Case Study on Israeli Banks

Changes in Financial Intermediation Structure - Their Implications for Central Bank Policies: Korea's Experience

Changing Patterns of Financial Intermediation and Implications for Central Bank Policy: The Malaysian Perspective

Is Trouble Brewing for EMEs?

Evolution of Bank and Non-Bank Corporate Funding in Peru

Increased Financial Intermediation in the Philippines: Some Implications for Monetary Policy

The Evolution of Banking Sectors in Central and Eastern Europe - the Case of Poland

Changing Patterns of Financial Intermediation: Implications for Central Bank Policy

Changing Patterns of Financial Intermediation: Implications for Central Bank Policy

Trends in Financial Intermediation: Implications for Central Bank Policy

Changing Patterns of Financial Intermediation: Implications for Central Bank Policy

Patterns of Financial Intermediation in Thailand: Implications for Central Bank Policy

Monetary Policy Transmission and Shifts in Financial Intermediation

Changing Patterns of Financial Intermediation: Implications for Central Bank Policy

JEL Classification: G15, G20, E44, E52

Suggested Citation

Settlements, Bank for International, What Do New Forms of Finance Mean for EM Central Banks? (November 2015). BIS Paper No. 83, Available at SSRN: https://ssrn.com/abstract=2692232

Bank for International Settlements (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4051
Switzerland

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