The transmission of unconventional monetary policy to the emerging markets

Bank for International Settlements

No 78 in BIS Papers from Bank for International Settlements

Abstract: Highly accommodative monetary policies in the major advanced economies and the questions about the exit from such policies have created major challenges for policymakers in emerging market economies (EMEs). Quite a few of EMEs that experienced rapid capital inflows and strong currency appreciation pressures during 2010-12 saw a sharp reversal in episodes of market volatility from May 2013 to February 2014. This meeting of Deputy Governors focussed on three main questions: (i) How can external monetary conditions become a source of risks to monetary and financial stability in EMEs? (ii) How should central banks respond to such shocks? (iii) And, can there be a greater international role for emerging market currencies? A key conclusion from the discussion is that asset prices and interest rates have become more correlated globally during the period of unprecedented monetary easing by advanced economies. One major worry was the risk of an abrupt reversal of capital inflows to EMEs. Central banks face difficult policy dilemmas in preserving financial stability while pursuing their monetary policy goals. It is hard for EME monetary authorities to counter a prolonged period of very low long-term interest rates and increased risk-taking in global financial markets.

Date: 2014 Written 2014-08
ISBN: 92-9197-567-3
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Chapters in this book:

The transmission of unconventional monetary policy to the emerging markets - An overview , pp 1-24

Madhusudan Mohanty

International monetary policy transmission , pp 25-44

Elod Takats and Abraham Vela

How might EME central banks respond to the influence of global monetary factors? , pp 45-69

Blaise Gadanecz, Ken Miyajima and Jörg Urban

Internationalisation of emerging market currencies , pp 71-86

Guonan Ma and Agustin Villar

International financial spillovers: policy responses and coordination , pp 87-94

Miguel Angel Pesce

What have central banks in EMEs learned about the international transmission of monetary policy in recent years? , pp 95-109

João Barroso, Emanuel W Kohlscheen and Eduardo J A Lima

Monetary policy independence in Chile , pp 111-123

Sebastian Claro and Luis Opazo

International monetary policy spillovers and responses , pp 125-127

The People's Bank of China

An empirical analysis of the relationship between US and Colombian long-term sovereign bond yields , pp 129-158

Alexander Guarín López, José Moreno Gutiérrez and Hernando Vargas-Herrera

Evolution of the Czech National Bank's holdings of foreign exchange reserves , pp 159-169

Michal Skořepa and Mojmír Hampl

What have we learnt about the international transmission of monetary policy in recent years? Perspectives from Hong Kong SAR , pp 171-183

Hong Kong Monetary Authority

Short-rate expectations and term premia: experiences from Hungary and other emerging market economies , pp 185-196

Dániel Horváth, Péter Kálmán, Zalan Kocsis and Imre Ligeti

The transmission mechanism and policy responses to global monetary developments: the Indonesian experience , pp 197-213

Perry Warjiyo

The international transmission of monetary policy: Korea's experience , pp 215-227

Jun Il Kim

Spillovers from global monetary conditions: recent experience and policy responses in Malaysia , pp 229-240

Sukhdave Singh

Global policy spillovers and Peru’s monetary policy: inflation targeting, foreign exchange intervention and reserve requirements , pp 241-264

Renzo Rossini, Adrian Armas and Zenon Quispe

What have emerging market central banks learned about the international transmission of monetary policy in recent years? The Philippine case , pp 265-283

Diwa C Gunigundo

Changing patterns in the dependence of long-term rates between Poland and major financial centres , pp 285-295

Michal Adam, Witold Kozinski and Michal Markun

Monetary policy in Russia: Recent challenges and changes , pp 297-303

Central Bank of the Russian Federation

What have central banks from EMEs learnt about the international transmission of monetary policy in recent years? , pp 305-307

Saudi Arabian Monetary Agency

What have central banks from emerging market economies learnt about the international transmission of monetary policy in recent years? , pp 309-320

Jacqueline Loh

The international transmission of monetary policy - lessons learnt in South Africa , pp 321-331

South African Reserve Bank

The international transmission of monetary policy in recent years: Thailand's perspectives , pp 333-345

Don Nakornthab

Cross-border portfolio flows and the role of macroprudential policies: experiences from Turkey , pp 347-359

Salih Fendoglu, Mustafa Kilinc and Mehmet Yorukoglu

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