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Tag Archives: U.S. Federal Reserve

Global Policy Responses to Capital Flow Volatility

By Annamaria De Crescenzio, Annamaria Kokenyne, Dennis Reinhart, and Julia Schmidt The COVID-19 health and economic crisis has once again focused attention on the fickleness of capital flows and the need to have an adequate policy toolkit to manage the risks that stem from these flows, while maximizing their benefits. A virtual workshop organized by the Bank of England, Banque de France, International Monetary Fund and the Organization for Economic Co-operation and Development (OECD)...

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The Short-term Liquidity Line: A New IMF Tool to Help in the Crisis

By Geoffrey Okamoto Challenging times for emerging markets The COVID-19 pandemic has severely disrupted the global economy at every level. Across the world, financial conditions have tightened dramatically, with unprecedented portfolio outflows from emerging markets in terms of both size (a record of about $100 billion) and speed, and markets effectively frozen in some cases. This has created sizable demand for U.S. dollar liquidity, with emerging markets facing sharp liquidity shortages. A...

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Fed Tightening May Squeeze Portfolio Flows to Emerging Markets

By Robin Koepke December 14, 2017 Version in  中文 (Chinese),  Français (French),  Русский (Russian) Derivatives traders in Singapore: Tighter Federal Reserve monetary policy is likely to reduce overseas purchases of emerging market stocks and bonds (photo: Caro/Rupert Oberhaeuser/Newscom) A key question facing global investors today is what impact the US Federal Reserve’s monetary policy normalization process will have on capital flows to emerging markets. The IMF’s new model...

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Sovereign Wealth Funds in the New Era of Oil

By Rabah Arezki, Adnan Mazarei, and Ananthakrishnan Prasad  (Versions in عربي and 中文) As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. The growth in the assets of their sovereign wealth funds, which were rising at a rapid rate until recently, is now slowing; some have started drawing on their buffers. In the short run, this phenomenon is not cause for alarm. Most oil exporters have enough buffers to withstand a...

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To Hike or Not to Hike? Monetary Policy in Latin America During Fed Liftoff

By Carlos Caceres, Yan Carrière-Swallow, and Bertrand Gruss (Versions in Español and Português) As the U.S. Federal Reserve prepares to raise policy rates for the first time in almost a decade, Latin America is in the midst of a sharp downturn with unemployment on the rise. In this context, many central banks across the region have kept interest rates low to support economic activity. But can monetary policy stay that way as global rates rise? What will the Fed liftoff imply for the region?...

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Global Financial Stability: Vulnerabilities, Legacies, and Policy Challenges

(Versions in 中文, Français, Русский, and Español) Today global financial stability is not yet assured and downside risks prevail. Our recommendation is for an urgent upgrade in policies, to avoid downside risks and to achieve our upside scenario of “successful normalization” of monetary and financial conditions. This will secure financial stability and strengthen the economic recovery. Let me first provide you with our overall assessment for financial stability. How has it changed since our...

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