How Do Global Liquidity Phases Manifest Themselves in Asia?

Asian Development Bank (adb)

No RPT136042-3, ADB Reports from Asian Development Bank (ADB)

Abstract: Given the catastrophe in the world’s largest economy and the subsequent unprecedented ultra-easy money policies, policy makers around the world have to face a new environment. The resulting capital flows in emerging market economies were huge and volatile. These flows have been intermediated through the banking sector (Phase One), and through the capital market, especially the fast growing bond market (Phase Two). Benefits and risks arise with these flows. The risks came to the fore after some signs emerged that the quantitative-easing policy in the US may slow down or even reverse, causing a reversal of capital flows. The analysis in this monograph expands on the implications of such a trend for emerging Asia, where financial cycles are falling out of sync with business cycles, reducing the effectiveness of monetary policy and thereby requiring a separate macroprudential policy.

Keywords: capital; liquidity; bond market; regional safety nets; macroprudential; phases of liquidity; capital flows; balance sheet; quantitative easing; QE tapering; procyclicality; non-core liabilities; money; money printing; money supply (search for similar items in EconPapers)
Pages: 69 pages
Date: 2013-08, Revised 2013-11-05
New Economics Papers: this item is included in nep-mac, nep-mon and nep-sea
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Citations: View citations in EconPapers (5)

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