Global Liquidity: Changing Instrument and Currency Patterns
11 Pages Posted: 30 Nov 2018
Date Written: September 1, 2018
International (cross-border and foreign currency) credit, a key indicator of global liquidity, has continued to expand in recent years to 38% of global GDP. This growth has been driven by international debt securities issuance, while the role of banks has diminished – both as lenders and as investors in debt securities. The aggregate trend has been more pronounced for advanced economy than emerging market borrowers. For individual countries, however, the growth of bank loans and that of debt securities have tended to move in tandem, highlighting the cyclical nature of global liquidity. The US dollar has become even more dominant as an international funding currency – in particular for emerging market borrowers. However, dollar exposures in emerging market economies vary substantially across countries and sectors.
JEL Classification: G10, F34, G21
Suggested Citation: Suggested Citation