This report discusses FX liquidity metrics and their drivers, reaching four conclusions. First, changes in FX markets have reduced the usefulness of some conventional FX liquidity metrics; several metrics need to be assessed together to give a better picture of market liquidity. Second, some...

Foreign investors play a key role in sovereign bond markets in emerging market economies (EMEs), in part because their portfolio flows are sensitive to bond returns and are therefore pro-cyclical in nature. This note discusses the implications of the framework proposed by So et al (2019), which...

Emerging market economies (EMEs) have increased their reserves holdings primarily for self-insurance. The South African Reserve Bank (SARB) has accumulated its foreign exchange (FX) reserves for the same reason, recognising the need to reduce external vulnerability. Both debt issuance and the...

The emergence and persistence of basis spreads in cross-currency basis swaps (CCBS) since the global financial crisis have become a mystery in international finance, as they violate the long-standing principle of covered interest parity (CIP). We argue that the phenomenon is no mystery but...

Fatum and Yetman (2017) assess whether foreign currency reserves accumulation in the Asia-Pacific region is systematically associated with risk-taking, using an event study approach to examine the responses of various proxies of risk-taking to official announcements of reserves stocks. Across a...

The increasing size and concentration of official foreign exchange reserves after years of continued expansion, especially since the Asian crisis, have led to renewed interest in the way reserve management decisions are taken and in their possible impact on financial markets. Reserve management...

This paper evaluates the effectiveness of macroprudential policies in five Asia-Pacific countries (Australia, Indonesia, New Zealand, the Philippines and Thailand). We use supervisory bank-level data and apply a common empirical strategy. We find that macroprudential policies are effective in...

Combining data on 1.3 million firms from 2002 to 2011 operating in 59 countries with changes in macroprudential regulations over this period, we find some evidence that macroprudential policies are associated with lower credit growth, especially for small firms with limited non-bank financing....

A report prepared for EMEAP by Marlene Amstad, Steven Kong, Frank Packer and Eli Remolona at the request of Mr Grant Spencer, Deputy Governor of the Reserve Bank of New Zealand and Chair of the EMEAP Working Group on Financial Markets.The eight local currency bond markets in which the Asian Bond...

This paper discusses how the unconventional monetary policies in advanced economies have impacted Hong Kong SAR through the financial channel. Following the 2008–09 global financial crisis, the monetary expansion in advanced economies has led to extremely loose liquidity conditions on a global...