“Transmission of Global Liquidity Through Capital Flows”
Brenda Gonzalez-Hermosillo
Deputy Division Chief of the Global Financial Stability Division at the International Monetary Fund
Thursday 16th Oct, 13:30-15:00
INET Oxford Meeting Room (ground floor) INET Oxford
Eagle House, Walton Well Road, OX2 6ED
ABSTRACT:
The global financial crisis and the associated large scale policy interventions around the world have raised many questions about the transmission of financial shocks in an interconnected global economy. Concepts such as global liquidity have been used in discussing these questions, but not always clearly, in part because the term “liquidity” has many meanings. Yet the expression “global liquidity” is commonly used to refer to the “ease of funding” in global financial markets. It is manifest in the extent to which borrowing constraints are binding in accessing international funding and can be captured in how conditions in financial centers – systemic, reserve currency economies – are transmitted to other financially open economies through capital flows. As it is often identified both with conditions prevailing in major financial markets and intermediaries, and monetary policy conditions, it lies at the intersection of microeconomic, financial, regulatory and macroeconomic factors.