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Global liquidity: a new phase?

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  • Bryan Hardy
  • Goetz von Peter

Abstract

Foreign currency credit – a key aspect of global liquidity – has undergone distinct phases. The first phase recorded by the BIS global liquidity indicators (2003–09) featured soaring bank credit amid accommodative financial conditions in the run-up to the Great Financial Crisis (GFC). The second phase (2009–21) saw a shift towards bond markets and more dollar credit, especially to borrowers in emerging market economies (EMEs), on the back of tighter bank regulation and a loose monetary stance. Has the recent global surge in inflation and monetary tightening ushered in a new phase? Recent patterns point to a contraction in foreign currency credit, primarily in dollars, and particularly for EMEs.

Suggested Citation

  • Bryan Hardy & Goetz von Peter, 2023. "Global liquidity: a new phase?," BIS Quarterly Review, Bank for International Settlements, December.
    • Handle: RePEc:bis:bisqtr:2312b
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    References listed on IDEAS

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    Cited by:

    1. Stefan Avdjiev & Leonardo Gambacorta & Linda S Goldberg & Stefano Schiaffi, 2025. "The risk sensitivity of global liquidity flows: Heterogeneity, evolution and drivers," BIS Working Papers 1262, Bank for International Settlements.
    2. repec:ocp:rpaper:pp-0124 is not listed on IDEAS
    3. Torsten Ehlers & Bryan Hardy & Patrick McGuire, 2025. "International finance through the lens of BIS statistics: the international dimensions of credit," BIS Quarterly Review, Bank for International Settlements, March.
    4. repec:ocp:rpecon:pp_01-24 is not listed on IDEAS
    5. Avdjiev, Stefan & Burger, John D. & Hardy, Bryan, 2024. "New spare tires: local currency credit as a global shock absorber," CEPR Discussion Papers 19288, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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