A note on money creation in emerging market economies

Alexey Ponomarenko

No 4/2016, BOFIT Discussion Papers from Bank of Finland Institute for Emerging Economies (BOFIT)

Abstract: This paper discusses the money creation mechanisms in emerging markets with special focus on external transactions. We argue that one should not rule out the possibility that fluctuations in the loans-to-deposits and non-core liabilities ratios are driven by the banks. We also argue that, under a flexible exchange rate regime in which the central bank is not trying to accumulate foreign reserves, external transactions are unlikely to contribute significantly to money growth. To make our argument, we analyze a historical episode of these flows in Korea and Russia and conduct a canonical correlation analysis for a cross-section of emerging market economies.

JEL-codes: E51 F30 G21 (search for similar items in EconPapers)
Date: 2016
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Related works:
Journal Article: A note on money creation in emerging market economies (2017)
Working Paper: A note on money creation in emerg-ing market economies (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofitp:bdp2016_004

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