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Global liquidity: changing instrument and currency patterns

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  • Iñaki 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

  • Iñaki 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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    Cited by:

    1. Abraham,Facundo & Cortina Lorente,Juan Jose & Schmukler,Sergio L., 2020. "Growth of Global Corporate Debt : Main Facts and Policy Challenges," Policy Research Working Paper Series 9394, The World Bank.
    2. Gergely Hudecz & Edmund Moshammer & Alexander Raabe & Gong Cheng, 2021. "The euro in the world," Discussion Papers 16, European Stability Mechanism, revised 27 Oct 2021.
    3. Kumhof, Michael & Sokol, Andrej & Rungcharoenkitkul, Phurichai, 2020. "How Does International Capital Flow?," CEPR Discussion Papers 15526, C.E.P.R. Discussion Papers.
    4. Georgiadis, Georgios & Zhu, Feng, 2021. "Foreign-currency exposures and the financial channel of exchange rates: Eroding monetary policy autonomy in small open economies?," Journal of International Money and Finance, Elsevier, vol. 110(C).
    5. Irving Fisher Committee, 2020. "Using financial accounts," IFC Bulletins, Bank for International Settlements, number 51, July.
    6. Yannis Dafermos & Daniela Gabor & Jo Michell, 2023. "FX swaps, shadow banks and the global dollar footprint," Environment and Planning A, , vol. 55(4), pages 949-968, June.
    7. Stijn Claessens, 2019. "Fragmentation in global financial markets: good or bad for financial stability?," BIS Working Papers 815, Bank for International Settlements.
    8. Malamud, Semyon & Eren, Egemen, 2018. "Dominant Currency Debt," CEPR Discussion Papers 13391, C.E.P.R. Discussion Papers.
    9. Bryan Hardy, 2019. "Emerging markets' reliance on foreign bank credit," BIS Quarterly Review, Bank for International Settlements, March.
    10. Hoek, Jasper & Kamin, Steve & Yoldas, Emre, 2022. "Are higher U.S. interest rates always bad news for emerging markets?," Journal of International Economics, Elsevier, vol. 137(C).
    11. Iñaki Aldasoro & Wenqian Huang & Esti Kemp, 2020. "Cross-border links between banks and non-bank financial institutions," BIS Quarterly Review, Bank for International Settlements, September.
    12. Ivan, Miruna-Daniela & Banti, Chiara & Kellard, Neil, 2022. "Prime money market funds regulation, global liquidity, and the crude oil market," Journal of International Money and Finance, Elsevier, vol. 127(C).
    13. Nina Boyarchenko & Leonardo Elias & Philippe Mueller, 2019. "Corporate Credit Provision," Staff Reports 895, Federal Reserve Bank of New York.
    14. Brendan Brown, 2019. "Inflation and the Boom-Bust Cycle in Corporate Leverage," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 25-34, March.
    15. Villca, Alfredo, 2022. "Commodity prices, bank balance sheets and macroprudential policies in small open economies," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(1).
    16. Bryan Hardy, 2020. "Assessing global liquidity: beyond borders," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Using financial accounts, volume 51, Bank for International Settlements.
    17. Gandy, Axel & Veraart, Luitgard A. M., 2021. "Compound poisson models for weighted networks with applications in finance," LSE Research Online Documents on Economics 104185, London School of Economics and Political Science, LSE Library.
    18. Bryan Hardy & Goetz von Peter, 2023. "Global liquidity: a new phase?," BIS Quarterly Review, Bank for International Settlements, December.
    19. Andrea Fabiani & Martha López Piñeros & José-Luis Peydró & Paul E. Soto, 2021. "Capital controls, corporate debt and real effects," Economics Working Papers 1833, Department of Economics and Business, Universitat Pompeu Fabra.
    20. Hiro Ito & Cesar M. Rodriguez, 2020. "Clamoring for greenbacks: Explaining the resurgence of the U.S. dollar in international debt," International Finance, Wiley Blackwell, vol. 23(3), pages 370-391, December.

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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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