Currencies Of External Balance Sheets

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Currencies of External Balance Sheets

Author : Mr. Cian Allen
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 50 pages
Book Rating : 4.4/5 (2 download)

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Book Synopsis Currencies of External Balance Sheets by : Mr. Cian Allen

Download or read book Currencies of External Balance Sheets written by Mr. Cian Allen and published by International Monetary Fund. This book was released on 2023-11-17 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assembles a comprehensive dataset of the currency composition of countries’ external balance sheets for 50 economies over the period 1990–2020. We document the following findings: (i) the US dollar and the euro still dominate global external balance sheets; (ii) there were striking changes in the currency composition across countries since the 1990s, with many emerging markets having moved from short to long positions in foreign currency, thus moving away from the so-called “original sin”; (iii) financial and tradeweighted exchange rates are weakly correlated, suggesting the commonly used trade indices do not adequately reflect the wealth effects of currency movements, and (iv) the large wealth transfers across countries during COVID-19 and the global financial crises increased global imbalances in the former, and reduced them in the latter.

External Balance Sheets and the COVID-19 Crisis

Author : Galina Hale
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (127 download)

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Book Synopsis External Balance Sheets and the COVID-19 Crisis by : Galina Hale

Download or read book External Balance Sheets and the COVID-19 Crisis written by Galina Hale and published by . This book was released on 2021 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: At the onset of the COVID-19 economic crisis, as in other crisis episodes, the flight to safety was accompanied by a rapid appreciation of "safe haven" currencies. We quantify currency-induced balance sheet effects for total external positions as well as for individual asset classes using new data on the currency composition of cross-border assets for 48 countries for the first quarter as well as full year 2020. For the first quarter of 2020 we also conduct the stock-flow reconciliation of net international investment positions to measure overall valuation effects. We show that for many countries currency-induced valuation gains mitigated losses that resulted from declining asset prices in the first quarter of 2020. Moreover, for countries with excess capital outflows during this period, the impacts on external balance sheet positions were mitigated by valuation gains. This is because, in contrast with past financial crises, many emerging markets did not experience negative external balance sheet effects from their currency depreciation, partly due to currency-induced valuation gains on equity positions offsetting losses on debt positions, partly due to reduced currency mismatch on their external debt positions.

Debt-Related Vulnerabilities and Financial Crises - an Application of the Balance Sheet Approach to Emerging Market Countries

Author : International Monetary Fund. Policy Development and Review Dept.
Publisher : International Monetary Fund
ISBN 13 : 1498330274
Total Pages : 63 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Debt-Related Vulnerabilities and Financial Crises - an Application of the Balance Sheet Approach to Emerging Market Countries by : International Monetary Fund. Policy Development and Review Dept.

Download or read book Debt-Related Vulnerabilities and Financial Crises - an Application of the Balance Sheet Approach to Emerging Market Countries written by International Monetary Fund. Policy Development and Review Dept. and published by International Monetary Fund. This book was released on 2004-01-07 with total page 63 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL

The long or short of it

Author : Philip R. Lane
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (12 download)

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Book Synopsis The long or short of it by : Philip R. Lane

Download or read book The long or short of it written by Philip R. Lane and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: A major focus of the recent literature on the determination of optimal portfolios in open-economy macroeconomic models has been on the role of currency movements in determining portfolio returns that may hedge various macroeconomic shocks. However, there is little empirical evidence on the foreign currency exposures that are embedded in international balance sheets. Using a new database, we provide stylized facts concerning the cross-country and time-series variation in aggregate foreign currency exposure and its various subcomponents. In panel estimation, we find that richer, more open economies take longer foreign-currency positions. In addition, we find that an increase in the propensity for a currency to depreciate during bad times is associated with a longer position in foreign currencies, providing a hedge against domestic output fluctuations. We view these new stylized facts as informative in their own right and also potentially useful to the burgeoning theoretical literature on the macroeconomics of international portfolios.

International Reserves and Foreign Currency Liquidity

Author : International Monetary Fund. Statistics Dept.
Publisher : International Monetary Fund
ISBN 13 : 1484350162
Total Pages : 258 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis International Reserves and Foreign Currency Liquidity by : International Monetary Fund. Statistics Dept.

Download or read book International Reserves and Foreign Currency Liquidity written by International Monetary Fund. Statistics Dept. and published by International Monetary Fund. This book was released on 2015-01-07 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: This update of the guidelines published in 2001 sets forth the underlying framework for the Reserves Data Template and provides operational advice for its use. The updated version also includes three new appendices aimed at assisting member countries in reporting the required data.

Using the Balance Sheet Approach in Surveillance

Author : Mr.Johan Mathisen
Publisher : International Monetary Fund
ISBN 13 : 1589066049
Total Pages : 46 pages
Book Rating : 4.5/5 (89 download)

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Book Synopsis Using the Balance Sheet Approach in Surveillance by : Mr.Johan Mathisen

Download or read book Using the Balance Sheet Approach in Surveillance written by Mr.Johan Mathisen and published by International Monetary Fund. This book was released on 2007-03-29 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: A distinguishing feature of emerging market crises in recent years has been the sudden disruption in the capital accounts of the economy. These crises have highlighted the need for closer attention to macroeconomic vulnerabilities in sectoral balance sheets. This book enhances application of the balance sheet approach to surveillance by taking advantage of new data sets that provide detailed, frequent, and timely financial statistics.

International Currency Exposure

Author : Yin-Wong Cheung
Publisher : MIT Press
ISBN 13 : 0262036401
Total Pages : 323 pages
Book Rating : 4.2/5 (62 download)

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Book Synopsis International Currency Exposure by : Yin-Wong Cheung

Download or read book International Currency Exposure written by Yin-Wong Cheung and published by MIT Press. This book was released on 2017-07-14 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: Issues in debates about foreign currency exposure—the denomination of liabilities or assets in foreign currency. The foreign currency denomination of contracts in international transactions can lead to international currency exposure at the country level with important economic and policy implications. When debts are denominated in foreign currency and revenues in domestic currency, exchange rate fluctuations can result in balance sheet effects for countries with either net asset or liability positions. Moreover, currency mismatch between assets and liabilities can be a cause for crises in developing and emerging economies. This book looks at the issues surrounding foreign currency exposure in today's increasingly integrated world economy. The contributors draw on cross-country as well as country-specific data. They consider international currency risk after the Swiss franc ended its one-sided peg with the euro, for example, and the foreign exchange positions of firms in Turkey and Russia. Other contributors take macroeconomic perspectives, examining the potential effects of exchange rate realignment, the pressure to appreciate on countries with current account surpluses, and the currency exposure in international trade. Finally, contributors consider the issue from finance and political economy perspectives, addressing the phenomenon of the forward premium puzzle and discussing geopolitical aspects ascending currencies. Contributors Fatih Altunok, Huseyin Aytug, Agustín S. Bénétrix, Jörg Breitung, Paul De Grauwe, Eiji Fujii, Peter Garber, Juann H. Hung, Signe Krogstrup, Philip R. Lane, Katja Mann, Arif Oduncu, Gunther Schnabl, Maria V. Sokolova, Cédric Tille

Currency-Induced External Balance Sheet Effects at the Onset of the COVID-19 Crisis

Author : Galina Hale
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (119 download)

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Book Synopsis Currency-Induced External Balance Sheet Effects at the Onset of the COVID-19 Crisis by : Galina Hale

Download or read book Currency-Induced External Balance Sheet Effects at the Onset of the COVID-19 Crisis written by Galina Hale and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

A New Index of Currency Mismatch and Systemic Risk

Author : Mr.Romain Ranciere
Publisher : International Monetary Fund
ISBN 13 : 1455210706
Total Pages : 27 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis A New Index of Currency Mismatch and Systemic Risk by : Mr.Romain Ranciere

Download or read book A New Index of Currency Mismatch and Systemic Risk written by Mr.Romain Ranciere and published by International Monetary Fund. This book was released on 2010-11-01 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper constructs a new measure of currency mismatch in the banking sector that controls for bank lending to unhedged borrowers. This measure explicitly takes into account the indirect exchange rate risk that banks undertake when they lend to borrowers that will not be able to repay in the event of a sharp depreciation. Such systemic risk taking is not captured by indicators that are based only on banks’ balance sheet data. The new measure is constructed for 10 emerging European economies and for a broader sample that includes 19 additional emerging economies, for the period 1998 - 2008. Comparisons with previous currency mismatch measures that do not adjust for unhedged foreign currency borrowing illustrate the advantages of the new approach. In particular, the new measure flagged the indirect currency mismatch vulnerabilities that were building up in a number of emerging economies before the recent global crisis. Measuring currency mismatch more accurately can help country authorities in their efforts to address vulnerabilities at the right time, avoiding hurting growth prospects.

Limits of Floating Exchange Rates

Author : Mr.Sebastian Weber
Publisher : International Monetary Fund
ISBN 13 : 1455219002
Total Pages : 53 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis Limits of Floating Exchange Rates by : Mr.Sebastian Weber

Download or read book Limits of Floating Exchange Rates written by Mr.Sebastian Weber and published by International Monetary Fund. This book was released on 2011-02-01 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: A traditional argument in favor of flexible exchange rates is that they insulate output better from real shocks, because the exchange rate can adjust and stabilize demand for domestic goods through expenditure switching. This argument is weakened in models with high foreign currency debt and low exchange rate pass-through to import prices. The present study evaluates the empirical relevance of these two factors. We analyze the transmission of real external shocks to the domestic economy under fixed and flexible exchange rate regimes for a broad sample of countries in a Panel VAR and let the responses vary with foreign currency indebtedness and import structure. We find that flexible exchange rates do not insulate output better from external shocks if the country imports mainly low pass-through goods and can even amplify the output response if foreign indebtedness is high.

Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia

Author : Mr.Adolfo Barajas
Publisher : International Monetary Fund
ISBN 13 : 1484330560
Total Pages : 41 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia by : Mr.Adolfo Barajas

Download or read book Currency Mismatches and Vulnerability to Exchange Rate Shocks: Nonfinancial Firms in Colombia written by Mr.Adolfo Barajas and published by International Monetary Fund. This book was released on 2017-11-22 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: After building up foreign currency denominated (FC) liabilities over several years, Colombian firms might be vulnerable to a shift in external conditions. We undertake three empirical exercises to better understand these vulnerabilities. First, we identify the determinants of FC borrowing. Second, we investigate the implications for real activity, finding a balance sheet effect that transmits exchange rate fluctuations to investment and is asymmetric, much stronger for depreciations than for appreciations. Finally, we find that foreign exchange derivatives are not used solely for hedging, due in part to monetary authority intervention to smooth exchange rate volatility. However, a full explanation remains open for future research.

Cross-Border Currency Exposures

Author : Luciana Juvenal
Publisher : International Monetary Fund
ISBN 13 : 1513525379
Total Pages : 67 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Cross-Border Currency Exposures by : Luciana Juvenal

Download or read book Cross-Border Currency Exposures written by Luciana Juvenal and published by International Monetary Fund. This book was released on 2019-12-27 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a dataset on the currency composition of the international investment position for a group of 50 countries for the period 1990-2017. It improves available data based on estimates by incorporating actual data reported by statistical authorities and refining estimation methods. The paper illustrates current and new uses of these data, with particular focus on the evolution of currency exposures of cross-border positions.

Bank Balance Sheets and External Shocks in Asia: The Role of FXI, MPMs and CFMs

Author : Zefeng Chen
Publisher : International Monetary Fund
ISBN 13 : 1513566830
Total Pages : 43 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Bank Balance Sheets and External Shocks in Asia: The Role of FXI, MPMs and CFMs by : Zefeng Chen

Download or read book Bank Balance Sheets and External Shocks in Asia: The Role of FXI, MPMs and CFMs written by Zefeng Chen and published by International Monetary Fund. This book was released on 2021-01-15 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: In emerging Asia, banks constitute the dominant source of financing consumption and investment, and bank balance sheets comprise large gross FX assets and liabilities. This paper extends the DSGE model of Gertler and Karadi (2011) to incorporate these key features and estimates a panel vector autoregression on ten Asian economies to understand the role of the banking sector in transmitting spillovers from the global financial cycle to small open economies. It also evaluates the effectiveness of foreign exchange intervention (FXI) and other macroeconomic policies in responding to external financing shocks. External financial shocks affect net external liabilities of banks and the exchange rate, leading to changes in credit supply by banks and investment. For example, a capital outflow shock leads to a deprecation that reduces the net worth and intermediation capacity of banks exposed to foreign currency liabilities. In such cases, the exchange rate acts as shock amplifier and sterilized FXI, often deployed by Asian economies, can help cushion the economy. By contrast, with real shocks, the exchange rate serves as a shock absorber, and any FXI that weakens that function can be costly. We also explore the effectiveness of the monetary policy interest rate, macroprudential policies (MPMs) and capital flow management measures (CFMs).

Balance Sheets, Exchange Rate Policy, and Welfare

Author : Selim Elekdag
Publisher : International Monetary Fund
ISBN 13 :
Total Pages : 42 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Balance Sheets, Exchange Rate Policy, and Welfare by : Selim Elekdag

Download or read book Balance Sheets, Exchange Rate Policy, and Welfare written by Selim Elekdag and published by International Monetary Fund. This book was released on 2004-04 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: The debate about the appropriate choice of exchange rate regime is fundamental in international economics. This paper develops a small open-economy model with balance sheet effects and compares the performance of fixed and flexible exchange rate regimes. The model is solved up to a second-order approximation which allows us to address the issue of risk and welfare rigorously. The paper identifies threshold levels of the debt-to-GDP ratio above which fixed exchange rate regimes are welfare superior to monetary policy rules that imply flexible exchange rate regimes. The results suggest that emerging market economies that suffer from a relatively high level of indebtedness and are constrained in their pursuit of optimal monetary policy, could find it beneficial to opt for a fixed exchange rate regime.

Floating with a Load of FX Debt?

Author : Tatsiana Kliatskova
Publisher : International Monetary Fund
ISBN 13 : 151354330X
Total Pages : 35 pages
Book Rating : 4.5/5 (135 download)

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Book Synopsis Floating with a Load of FX Debt? by : Tatsiana Kliatskova

Download or read book Floating with a Load of FX Debt? written by Tatsiana Kliatskova and published by International Monetary Fund. This book was released on 2015-12-30 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Countries with de jure floating exchange rate regimes are often reluctant to allow their currencies to float freely in practice. One reason why countries may wish to limit exchange rate volatility is potential negative balance sheet effects due to currency mismatches on the balance sheets of firms and households. In this paper, we show in a sample of 15 emerging market economies that countries with large foreign exchange (FX) debt in the non-financial private sector tend to react more strongly to exchange rate changes using both FX interventions and monetary policy. Thus, our results support the idea that an important source of “fear of floating” is balance sheet currency mismatches. This effect is asymmetric; that is, countries stem depreciation but not appreciation pressure. Moreover, FX debt financed through the domestic banking system is more important for fear of floating than FX debt obtained directly from external sources.

Capital Flows: The Role of Bank and Nonbank Balance Sheets

Author : Ms.Yuko Hashimoto
Publisher : International Monetary Fund
ISBN 13 : 1498311474
Total Pages : 40 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Capital Flows: The Role of Bank and Nonbank Balance Sheets by : Ms.Yuko Hashimoto

Download or read book Capital Flows: The Role of Bank and Nonbank Balance Sheets written by Ms.Yuko Hashimoto and published by International Monetary Fund. This book was released on 2019-04-29 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the role of bank and nonbank financial institutions’ balance sheet foreign exposures and risk management practices in driving capital flow responses to global risk. Using a unique and previously unexplored dataset on domestic and cross border balance sheet positions of financial institutions collected by the IMF, we show that the response of overall capital flows to global risk shocks is associated with the on-balance sheet foreign exposures of nonbanks, but not with that of banks. A possible interpretation is that risk-averse and dynamically optimizing nonbanks reduce their foreign risk exposure when global risk perceptions increase, leading to capital flows, while banks tend to be hedged against these risks off balance sheet. In advanced countries, the findings suggest that nonbank portfolio adjustment to changing risk conditions may take place through derivatives transactions with banks, the hedging practices of which trigger bank related capital flows rather than portfolio flows.

Monetary Operations and Central Bank Balance Sheets in a World of Limited Government Securities

Author : Mr.Mark Zelmer
Publisher : International Monetary Fund
ISBN 13 : 1451971583
Total Pages : 25 pages
Book Rating : 4.4/5 (519 download)

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Book Synopsis Monetary Operations and Central Bank Balance Sheets in a World of Limited Government Securities by : Mr.Mark Zelmer

Download or read book Monetary Operations and Central Bank Balance Sheets in a World of Limited Government Securities written by Mr.Mark Zelmer and published by International Monetary Fund. This book was released on 2001-12-01 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: The limited supply of government securities in some industrial countries has important ramifications for the operating techniques used by central banks to implement monetary policy, provide credit to the financial sector, and also for the assets they hold on their balance sheets. The paper reviews the salient facts regarding industrial central bank balance sheets and operating techniques, and outlines different options for dealing with a limited supply of government securities. The main conclusion is that central banks may wish to consider extending credit using a broad range of assets as collateral, and engage in outright transactions of securities guaranteed by financial institutions.