distinguish the pattern of monetary policy operations of the liquidity providing central banks of the large industrialized … countries (creditor central banks) and the liquidity absorbing central banks of emerging market economies (debtor central banks …). Many debtor central banks provide liquidity through foreign exchange intervention in reaction to foreign exchange inflows …

sterilization operations to absorb what we call "surplus liquidity" from the domestic banking systems. This has brought the East … that given buoyant capital inflows and exchange rate stabilization the absorption of surplus liquidity leads either to …