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The financial crisis and U.S. cross-border financial flows

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Abstract

The financial crisis that began in the summer of 2007 caused notable changes in the composition of U.S. cross-border financial flows, especially in the fall of 2008, when the crisis intensified. This article documents three major channels through which financial flows and associated portfolio positions were affected: (1) ?flight to safety? shifts away from riskier securities and toward investments in safe and liquid markets, particularly U.S. Treasury securities; (2) unusual flows through the banking system resulting from a shortage of dollar liquidity abroad and a breakdown in interbank markets; and (3) a pullback from cross-border positions during the crisis.

Suggested Citation

  • Carol C. Bertaut, 2009. "The financial crisis and U.S. cross-border financial flows," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 95(Nov), November.
    • Handle: RePEc:fip:fedgrb:y:2009:i:nov:n:v.95
    DOI: 10.17016/bulletin.2009.95-11
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    File URL: http://www.federalreserve.gov/pubs/bulletin/2009/pdf/Crossborder09.pdf
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    Cited by:

    1. Erika Brandner & Fang Cai & Ruth A. Judson, 2012. "Improving the measurement of cross-border securities holdings: the Treasury International Capital SLT," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue May.
    2. You, Kefei & Raju Chinthalapati, V.L. & Mishra, Tapas & Patra, Ramakanta, 2024. "International trade network and stock market connectedness: Evidence from eleven major economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    3. Koepke, Robin, 2018. "Fed policy expectations and portfolio flows to emerging markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 55(C), pages 170-194.
    4. Kamin, Steven B. & DeMarco, Laurie Pounder, 2012. "How did a domestic housing slump turn into a global financial crisis?," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 10-41.
    5. Julio, Brandon & Yook, Youngsuk, 2016. "Policy uncertainty, irreversibility, and cross-border flows of capital," Journal of International Economics, Elsevier, vol. 103(C), pages 13-26.
    6. Carol C. Bertaut & Ruth A. Judson, 2014. "Estimating U.S. Cross-Border Securities Positions: New Data and New Methods," International Finance Discussion Papers 1113, Board of Governors of the Federal Reserve System (U.S.).
    7. Erika Brandner & Fang Cai & Ruth A. Judson, 2012. "Improving Measurement of Cross-Border Securities Holdings: The TIC SLT," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 98(1), May.

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    Keywords

    Financial crises; Government securities;

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