Managing Global Liquidity as a Global Public Good. A Report of an RTI Working Party

André Icard () and Philip Turner
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André Icard: former Deputy Géneral Manager of BIS

No 1293, Working Papers from Robert Triffin International

Abstract: The cumulative balance sheet effects of a decade of low interest rates, long as well as short, have become very large. This report (of an RTI Working Party chaired by Bernard Snoy) examines the magnitudes of such effects through the many dimensions of global liquidity. This is not purely a monetary policy phenomenon as regulatory policies, restrictive fiscal policies in some advanced economies and structural factors have all had important impacts. Several indicators suggest increased financial vulnerabilities and higher risks of destabilising market dynamics. The dollar debt of non-banks outside the United States is at a new record: currency mismatches and leverage in the private sector have increased. The dollar funding of non-US banks looks fragile. Greater reliance on international bond markets has created new, opaque risks. There is widespread unease about the domination of the dollar, and about the inadequacy of the Global Financial Safety Net. The search for alternative multi-currency arrangements continues. But the need to address the risk of a new dollar liquidity crunch is urgent. International oversight of this issue is at present too fragmented. Policy responses at national level may require action by several bodies – central banks, regulators and Treasuries. The report therefore proposes that the Financial Stability Board, with inputs from the BIS, the IMF, the OECD and others, report regularly on global liquidity to G20 Ministers and Governors so they can act in time to avert a crisis.

Keywords: Global liquidity; lender of last resort; currency mismatches; G20; Triffin dilemma; international monetary system (search for similar items in EconPapers)
JEL-codes: E43 E58 F33 F38 F41 F42 G15 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2019-12
New Economics Papers: this item is included in nep-mac, nep-mon and nep-opm
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http://webarchive-2001-2021.triffininternational.e ... iquidity_Dec2019.pdf First version, December 2019

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Persistent link: https://EconPapers.repec.org/RePEc:afh:wpaper:1293

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