Financial Globalization and Exchange Rates

Philip Lane and G Milesi-Feretti

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The founders of the Bretton Woods System sixty years ago were primarily concerned with orderly exchange rateadjustment in a world economy that was characterized by widespread restrictions on international capitalmobility. In contrast, the rapid pace of financial globalization during recent years poses new challenges for theinternational monetary system. In particular, large gross cross-holdings of foreign assets and liabilities meansthat the valuation channel of exchange rate adjustment has grown in importance, relative to the traditional tradebalance channel. Accordingly, this paper empirically explores some of the inter-connections between financialglobalization and exchange rate adjustment and discusses the policy implications.

Keywords: Financial integration; capital flows; external assets and liabilities (search for similar items in EconPapers)
JEL-codes: F31 F32 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-cfn, nep-fin and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (55)

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Related works:
Working Paper: Financial Globalisation and Exchange Rates (2005)
Working Paper: Financial Globalization and Exchange Rates (2004)
Working Paper: Financial globalization and exchange rates (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0662

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