A global safe asset for and from emerging market economies
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Date
2019
Journal Title
Journal ISSN
Volume Title
Publisher
Banco Central de Chile
Abstract
Description
International capital flows are fickle. Short-term debt funding is especially subject to sudden stops. Sudden flight into safe-haven currencies can cause large disruptions and sharp currency movements ultimately leading to a crisis. When markets shift from a risk-on to a risk-off mood cross-country capital flows are triggered if the safe asset is not supplied symmetrically across counties. Advanced economies which supply safe assets experience capital inflows while most emerging economies suffer sudden outflows. Hence the design of global safe assets is paramount in creating a stable global financial architecture.
Keywords
MOVIMIENTOS DE CAPITAL, DEUDA