Global Liquidity: Changing Instrument and Currency Patterns

11 Pages Posted: 30 Nov 2018

See all articles by Iñaki Aldasoro

Iñaki Aldasoro

Bank for International Settlements (BIS)

Torsten Ehlers

Bank for International Settlements (BIS)

Date Written: September 1, 2018

Abstract

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

Aldasoro, Iñaki and Ehlers, Torsten, Global Liquidity: Changing Instrument and Currency Patterns (September 1, 2018). BIS Quarterly Review September 2018. Available at SSRN: https://ssrn.com/abstract=3288084

Iñaki Aldasoro (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Torsten Ehlers

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

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