Financial globalisation and emerging market capital flows

Bank for International Settlements

No 44 in BIS Papers from Bank for International Settlements

Abstract: The focus of Deputy Governors when they met for their annual meeting at the BIS in January 2008 was on the great expansion of the role of emerging market economies (EMEs) in the international banking and capital markets. The deeper integration of EMEs is seen in the rapid growth in their gross non-official inflows and outflows . The papers written for this meeting - three background papers by BIS staff members and the country-specific papers prepared at the central banks of 19 EMEs - tackle several topics related to the growth in capital flows. Some issues were thrown into sharper focus by the severe market stress in the fourth quarter of 2008. The topics covered include: 1. The great increase in capital outflows of EMEs and growth in sovereign wealth funds, changes in the volatility of capital flows, and the challenges posed in analysing the risk exposures created by different forms of capital flow; 2. Exchange rate-sensitive capital flows and the implications of greater development and foreign participation in local currency debt markets; exchange rate volatility and foreign exchange market intervention; 3. Increased cross-border bank flows and their implications for financial stability, including credit growth, liquidity risks and currency mismatches; 4. Financial and capital account reforms. The trend has been towards capital account liberalisation with some recent reversals; 5. Pension funds and demographic trends. Ageing trends should lower national saving rates and reduce current account surpluses in EMEs but precautionary motives for saving plus related fiscal and asset accumulation policies could offset these effects, at least for a time. The rapid growth in pension fund assets appears to have help to deepened some financial markets. This could be enhanced if pension portfolios were diversified further, including internationally; 6. More liquid EME markets. A recurrent theme of the meeting was the deepening of local money and capital markets. In particular, the development of derivatives markets in the EMEs has been helped by the very strong growth the spot foreign exchange market for EME currencies and the increase in local currency domestic bonds outstanding.

Date: 2008 Written 2008-12
ISBN: 92-9131-785-3
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.bis.org/publ/bppdf/bispap44.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/bppdf/bispap44.htm (text/html)

Chapters in this book:

Financial globalisation and emerging market capital flows , pp 1-10

Philip Turner

The financial stability implications of increased capital flows for emerging market economies , pp 11-44

Dubravko Mihaljek

Pension systems in EMEs: implications for capital flows and financial markets , pp 45-69

Ramon Moreno and Marjorie Santos

Hedging instruments in emerging market economies , pp 71-87

Sweta Saxena and Agustin Villar

Capital flows, economic performance and economic policy: Argentina’s experience during the last decade , pp 89-101

Miguel Angel Pesce

Capital flows to the Brazilian economy: 2003–07 , pp 103-119

Katherine Hennings and Mário Mesquita

Financial implications of capital outflows in Chile: 1998–2008 , pp 121-142

Jorge Desormeaux, Karol Fernández-Delgado and Pablo Garcia Silva

China: the evolution of foreign exchange controls and the consequences of capital flows , pp 143-151

People’s Bank of China

Capital flows and financial assets in Colombia: recent behaviour, consequences and challenges for the central bank , pp 153-184

Hernando Vargas-Herrera and Carlos Varela

The Czech experience with capital flows: challenges for monetary policy , pp 185-205

Ludek Niedermayer and Vit Barta

Capital flows into and out of Hong Kong SAR: implications for monetary and financial stability , pp 207-219

Hong Kong Monetary Authority

Retail credit expansion and external finance in Hungary: lessons from the recent past (1998–2007) , pp 221-233

Julia Király, Judit Antal, Marton Nagy and Viktor Szabo

Capital flows to India , pp 235-263

Rakesh Mohan

Capital flows in Indonesia: challenges and policy responses , pp 265-287

Miranda S Goeltom

Twenty years of financial liberalisation in Israel: 1987–2007 , pp 289-304

Zvi Eckstein and Tamar Ramot-Nyska

Capital flows and effects on financial markets in Korea: developments and policy responses , pp 305-320

Byung Chan Ahn

Capital flows and financial assets in emerging markets: determinants, consequences and challenges for central banks: the Malaysian experience , pp 321-339

Ooi Sang Kuang

The impact of international financial integration on Mexican financial markets , pp 341-361

Jose Sidaoui

Macroeconomic implications of capital inflows: Peru 1991–2007 , pp 363-387

Renzo Rossini, Zenon Quispe and Rocio Gondo Mori

Capital flows and financial assets in the Philippines: determinants, consequences and challenges for the central bank , pp 389-402

Celia M Gonzalez

Capital flows and their implications for monetary and financial stability: the experience of Poland , pp 403-421

Jerzy Pruski and Piotr Szpunar

Capital flows and financial assets in emerging markets: determinants, consequences and challenges for central banks , pp 423-426

Muhammad Al-Jasser and Ahmed Banafe

Thailand’s experiences with rising capital flows: recent challenges and policy responses , pp 427-465

Yunyong Thaicharoen and Nasha Ananchotikul

Capital flows to Turkey: financial implications and policy responses , pp 467-484

Mehmet Yorukoglu and Ali Çufadar

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisbps:44

Access Statistics for this book

More books in BIS Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().