Monetary Implications of Cross-Border Derivatives for Emerging Economies
AbstractThis paper surveys concepts, practices and analytical literature to assess benefits and risks for monetary stability of cross-border currency and interest rate derivative operations in calm and turbulent periods, with a view of extracting implications for emerging economies. Monetary authorities must prevent one-sided positions in the currency, favor asset substitutability, and incorporate the enriched information set provided by derivative-based transactions into monetary policy design. In some circumstances, the use of derivatives by monetary authorities may help fulfill this role. By contrast, surcharges to compensate for a downward impact of derivatives on the cost of capital appear neither advisable nor necessary.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 01/58.
Date of creation: 01 Apr 2001
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-02 (All new papers)
- NEP-FMK-2006-07-02 (Financial Markets)
- NEP-IFN-2006-07-02 (International Finance)
- NEP-MAC-2006-07-02 (Macroeconomics)
- NEP-MON-2006-07-02 (Monetary Economics)
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- Chiara Oldani, 2005. "An Overview of the Literature about Derivatives," Macroeconomics 0504004, EconWPA.
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