A Primer on 'Global Liquidity

Author:Eugenio Cerutti - Stijn Claessens - Lev Ratnovski
Pages:1-4
SUMMARY

Global liquidity" is often used to describe the impact of low U.S. and euro area interest rates on the rest of the world. The concept is critical for understanding the global financial cycle and international spillovers. This column defines global liquidity as the ease of financing in cross-border markets and points to its potential drivers. To limit their exposures to global liquidity... (see full summary)

 
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Volume 15, Number 3 September 2014
www.imf.org/researchbulletin
B U L L E T I N
1
A Primer on “Global Liquidity”
Eugenio Cerutti, Stijn Claessens, and Lev Ratnovski
“Global liquidity” is often
used to describe the imp act of
low U.S. and euro area inter-
est rates on the rest of the
world. The concept is c ritical
for understanding the global
financial cycle and inter national spillovers. This column defin es global liquidity
as the ease of financ ing in cross-border markets and points to its potential drivers.
To limit their exposures to global liquidity f luctuations nations can embrace bet-
ter macro policy framework s, consider capital flow manage ment tools, and more
stringently regulate and super vise banks.
e nancial cycle is be coming increasingly global, as hig hlighted in recent
work (Rey 2013, Bruno and Shin 2014, Obstfeld 2014) and reected in policy
discussions (e.g., the increased ta lk of nancial “spillovers”). e phenomenon is
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In This Issue
1 Letter from the
(New) Editor
1 A Primer on
“Global Liquidity”
5 Trade Integration
and Business Cycle
Synchronization
6 Q&A: Seven Questions
on the Global Housing
Markets
10 IMF Working Papers
13 Staff Discussion Notes
13 Fif teenth Jacques
Polak Annual Research
Conference
14 Recommended Readings
from IMF Publications
17 In Memoriam
18 IMF Economic Review
18 Announc ement:
New staff publication
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