The instability of the international monetary system e the recent strategies of the emerging countries
Keywords:
International Monetary System; emerging countries; management of capital flows; monetary cooperation, global financial safety networkAbstract
The global crisis triggered in 2007/2008 has propelled changing initiatives on the international monetary system (IMS). It is argued on this paper that it is possible to find patterns in emerging countries’ strategies since the 1990s and more markedly after the 2008 crisis, which would suggest their desire for a more stable IMS, especially regarding international financial flows. To this end, in addition to individual measures, the largest emerging countries have strengthened cooperation initiatives and pushed for changes in international economic institutions (IEI). Two sets of measures are analyzed. The first refers to the so called global financial safety net (GFSN). The second relates to management measures on capital flows. While the former works to mitigate the negative impacts of the instabilities of capital flows, the latter aims to reduce the own instabilities. We conclude that although the strengthening of the GFSN was important as a cushion for negative shocks, it has proved insufficient regarding the inherent vicissitudes of international liquidity cycles, so the need for management measures on capital flows still remains.
References
AIZENMAN, J. & BINICI, M. "Exchange market pressure in OECD and emerging economies: Domestic vs. external factors and capital flows in the old and new normal", Journal of International Money and Finance, n. 66, pp. 65–87, 2016.
AIZENMAN J. & HUTCHISON, M. H. "Exchange Market Pressure and Absorption by International Reserves: Emerging Markets and Fear of Reserve Loss During the 2008-09 Crisis", Journal of International Money and Finance, n. 31, 5, pp. 1076-1091, 2012.
AIZENMAN, J. & RIERA-CRICHTON, D. "Real Exchange Rate and International Reserves in the Era of Growing Financial and Trade Integration" In: NBER Working Papers, n. 12363, National Bureau of Economic Research, Inc., 2006.
ANAYA, P.; HACHULA, M. & OFFERMANNS, C. J. "Spillovers of U.S. unconventional monetary policy to emerging markets: The role of capital flows", Journal of International Money and Finance, v, 73, pp. 275-295, 2017.
BIRYUKOV, A.; ROWLING, R. & FEDORINOVA, Y. "Russia Is Dumping U.S. Dollars to Hoard Gold" In: Bloomberg, March 28, 2019.
BRUNO, V. e SHIN, H. S. Capital flows, cross-border banking and global liquidity. NBER Working Paper Series, 2013.
CALVO, G. A. & REINHART, C. M. "Fear of Floating", Quarterly Journal of Economics, n. 117(2), pp. 379-408, May 2002.
CAPORALE, M.; ALI, F. M.; SPAGNOLO, F & SPAGNOLO, N. "International portfolio flows and exchange rate volatility in emerging Asian markets", Journal of International Money and Finance, n. 76, pp. 1-15, 2017.
CHAMON, M. & MAGUD, N. E. "Why Intervene?" In: CHAMON, M.; HOFMAN, D.; MAGUD, N. E. & WERNER, A. Foreign Exchange Intervention in Inflation Targeters in Latin America. IMF, 2019.
COHEN, B. "Global Turmoil: The International Monetary System Today", The BRICS and Asia Currency Internationalization and International Monetary Reform. Paper No. 1., 2013.
COMBES, J-L.; KINDA, T. & PLANE, P. "Capital flows, exchange rate flexibility, and the real exchange rate", Journal of Macroeconomics, n. 34, pp. 1034–1043, 2012.
DAUDE, C.; YEYATI, E. L. & NAGENGAST, A. J. "On the effectiveness of exchange rate interventions in emerging markets", Journal of International Money and Finance, n. 64, pp. 239–261, 2016.
DE CONTI, B. M. Políticas cambial e monetária: os dilemas enfrentados por países emissores de moedas periféricas. Tese (Doutorado em Economia) – Instituto de Economia, Unicamp, Campinas, 2011.
DENBEE, E.; JUNG, C. & PATERNÒ, F. "Stitching together the global financial safety net. Financial Stability Paper" In: Bank Of England, n. 36, 2016.
DOW, S. "International liquidity preference and endogenous credit" In: DEPREZ, J. & HARVEY, J. Foundations of International Economics Post Keynesian perspectives. London: Routledge, 2001.
DURAN, C. V. "The International Lender of Last Resort for Emerging Countries: A Bilateral Currency Swap?", GEG Working Paper 2015/108, 2015.
EPSTEIN, G.; GRABEL, I. & JOMO, K. "Capital management techniques in developing countries: an assessment of experiences from the 1990s and lessons for the future", G-24 Discussion Paper 27, 2004.
GHOSH, A. R.; OSTRY, J. D. & QURESHI, M. S. "Managing the Tide: How Do Emerging Markets Respond to Capital Flows?", IMF Working Paper 17/60, 2017.
GIORDANI, P. E; RUTA, M.; WEISFELD, H. & ZHU, L. "Capital flow deflection", Journal of International Economics, n. 105, 2017.
IEO. The role of the IMF as trusted advisor. Washington DC: International Monetary Fund , 2013.
IMF. Annual Report On Exchange Arrangements and Exchange Restrictions. Washington, DC: International Monetary Fund, vários anos.
IMF. Fourteenth General Review of Quotas — The Size of the Fund: Initial Considerations and The Chairman’s Concluding Remarks, March 12, 2010.
IMF. The liberalization and management of capital flows: an institutional view, 2012. Disponível em: http://www.imf.org/external/np/pp/eng/2012/111412.pdf. Acesso em 03/12/2012.
IMF. Key aspects of macroprudential policy, 2013.
IMF. "Review of Flexible Credit Line, The Precautionary and Liquidity Line, and The Rapid Financing Instrument", IMF Policy Paper, 2014a.
IMF. "Quota formula — data update and further considerations", IMF Policy paper, 2014b.
IMF. Assessing Reserve Adequacy - Specific Proposals, 2015.
IMF. Fifteenth General Review of Quotas - Report of the Executive Board to the Board of Governors, November 2, 2016a.
IMF. "Capital flows — review of experience with the institutional view", IMF Policy Paper. Press Release n. 16/573, 2016b.
IMF. "Adequacy of the global financial safety net - considerations for fund toolkit reform.", IMF Policy Paper, 2017.
IMF. "Fifteenth and Sixteenth General Reviews of Quotas. Report of the Executive Board to the Board of Governors", Policy Paper n. 20/007, 2020.
IMF Data Mapper. Ratio of reserve/ARA metric, 2019.
JAMES, H. "International Cooperation and Central Banks", CIGI Essays on International Finance, vol. 1, October, 2013.
JEANNE, O. & RANCIÈRE, R. "The Optimal Level of International Reserves for Emerging Market Countries: a New Formula and Some Applications", IMF Working Paper, n. 06/229, 2009.
KHOR, H. E. "Chiang Mai Initiative Multilateralization (CMIM): Progress and Challenges". Apresentação, 2017.
KOEPKE, R. "Fed policy expectations and portfolio flows to emerging markets", Journal of International Financial Markets, Institutions & Money, 2018.
MCDOWELL, D. "The (Ineffective) Financial Statecraft of China’s Bilateral Swap Agreements", Development and Change, n. 50 (1), pp. 122–143, 2019.
MIHALIJEK, D. "Survey of central banks views on effects of intervention", BIS Paper, Basle: Bank of International Settlement, n. 24, 2005.
OCAMPO, J. Reseting the international Monetary (non) System. Oxford: Oxford University Press, 2017.
OSTRY, J. D.; HABERMEIER, K.; LAEVEN, L.; CHAMON, M.; QURESHI, M. & KOKENYNE, A. "Managing capital inflows: What tools to use?", IMF Staff Discussion Note, 2010.
PAKIAM, R. "China Is on a Big Gold-Buying Spree" In: Bloomberg, April 8, 2019.
PRATES, D. M. Crises financeiras dos países “emergentes”: uma interpretação heterodoxa. Tese (Doutorado em Economia) – Instituto de Economia, Unicamp, Campinas, 2002.
QURESHI et alii "Managing Capital Inflows: What Tools to Use? Managing Capital Inflows: The Role of Capital Controls and Prudential Policies", Working Paper 17363. Cambridge, MA 02138, 2011.
REY, H. Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence. London Business School, CEPR and NBER, 2013.
RODRIK, D. "The Social Cost of Foreign Exchange Reserves", International Economic Journal, n. 20 (3), pp. 253–66, 2006.
SHAFIK, M. "Fixing the global financial safety net: lessons from central banking" In: Bank Of England, 2015.
STEINER, A. "How central banks prepare for financial crises – An empirical analysis of the effects of crises and globalisation on international reserves", Journal of International Money and Finance, n. 33, pp. 208–234, 2013
TILLMANN, P. "Unconventional monetary policy and the spillovers to emerging markets", Journal of International Money and Finance, n. 66, pp. 136-156, 2016.
WEISS, M. A. & PRATES, D. M. "Análise teórica e empírica dos determinantes dos fluxos de capitais financeiros para os países em desenvolvimento no contexto da globalização financeira", Nova Economia, v. 27, pp. 85-117, 2017.
WOODS, N. "Global Economic Governance After the 2008 Crisis: A New Action Plan for the Reform of Global Economic Governance", GEG Working Paper 2014/89, 2014.
YONGDING, Y. "Como liberar o renminbi" In: Valor Econômico, 08/03/2019.
