Capital flows
Morocco introduces a more flexible exchange rate
The central bank introduces a daily band of 5% for the dirham to trade against major currencies
Low rates push investors to seek risk abroad – BIS paper
Authors find that low rates at home drive risk-taking overseas and the effect accelerates as rates approach zero
Paper: foreign fund inflows raised US pre-crisis risk-taking
The Bank of Italy paper correlates data on foreign inflows with four indicators of risk
Income convergence in eurozone faltered before euro, research finds
Strong financial cycle concealed lack of productivity growth since 1990s in Spain and Italy, implying euro may not be to blame
Distorted Swiss surplus not good base for policy – Jordan
Multinationals’ operations, higher nominal rates abroad and Swiss franc appreciation increase the surplus
Venezuelan crisis deepens; rating agencies declare default
Russia agrees to restructure $3.15 billion to facilitate repayments to creditors
Philippines central bank seeks to allay concerns on FDI slowdown
Foreign direct investment into the Philippines dropped 37.9% in the year to July; government is struggling to meet ambitious growth targets
PBoC targets stability ahead of party congress
China's central bank has taken several measures to boost stability in the run-up to the Communist party congress, which starts on October 18
EMs should work to avoid ‘macro-prudential war’ – BIS article
Use of macro-prudential policies should be co-ordinated internationally for maximum effect, say Luiz Pereira da Silva and Michael Chui
Fed paper calls for rethink of conditions for setting capital controls
Policymakers should also consider how external shocks affect the borrowing capacity of the country, researchers say
PBoC dials back on forex controls
Renminbi ends 11-day rise after the central bank relaxes reserve requirements; analysts view move as attempt to end one-way trading
Paper challenges Rey’s ideas on global financial cycle
Cerutti, Claessens and Rose contest idea that capital flows are mainly the result of common shocks or developments in the US
Philippines sees strong ‘hot money’ inflow despite currency weakness
Net inflow of foreign portfolio investments into Philippines hits six-month high, in contrast to weakness in peso
BNM governor warns global bodies against ‘one-pill-cures-all’ mindset
Wealth of information from multilateral institutions has aided decision-making, but narrow definition of the ‘right’ policies could lead to worse outcomes, Muhammad Ibrahim says
ECB’s Cœuré says asset purchases are not responsible for exchange rate movements
Executive board member says Europe’s asset purchase programme has boosted economic growth and inflation prospects; policy not “fundamentally different” from conventional policy
Any London forex trading move would be ‘gradual’ – ECB
City’s place in global submarine cable network is likely to be key, researcher says
BIS comes to the defence of globalisation
Increasing trade and financial integration have had a “profoundly positive” impact on people’s lives, but do bring drawbacks too; the correct response is not a wholesale rollback, says Jaime Caruana
Some outflows from China may have been ‘disguised’ – Fed paper
China’s success reducing current account surplus may partly have been due to financial outflows disguised as “travel”, Fed economist finds
Obstfeld and Taylor back dual trilemma global finance theory
Economists still need to better incorporate financial stability into their thinking, the authors argue, with the concept of a financial trilemma helping to explain recent instability
BNM’s Ibrahim urges Asia to “re-engineer” global monetary system
Countries should reduce their reliance on the US dollar and promote a “multi-currency market” within Asean, says Muhammad bin Ibrahim
Banking flows affected by ‘Anna Karenina principle’ – paper
All healthy credit relationships are alike, but each unhealthy credit relationship is unhealthy in its own way, the study explains
Illicit capital flows a problem for countries without capital controls – Mminele
Mminele explains how capital controls benefited cross-border flow monitoring; Sarb deputy calls for a “more consistent” approach to capital flow management
Worst could be yet to come, warns Sarb
Further credit downgrades could result in further outflows of investment in South Africa, threatening the strength of the rand and overall financial stability; governor Kganyago says central bank will work to avoid more volatility
China’s NPL problem has ‘stabilised’ – PBoC’s Yi
Deputy governor says non-performing loans are “pretty much stabilised” and capital outflow pressures have declined