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Global liquidity: changing instrument and currency patterns

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  • Inaki Aldasoro
  • Torsten Ehlers

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.

Suggested Citation

  • Inaki Aldasoro & Torsten Ehlers, 2018. "Global liquidity: changing instrument and currency patterns," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:1809b
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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