The avoidance of monetary system conflict: A role for recognition theory in reconstituting the global monetary system

2017 ◽  
Vol 6 (3) ◽  
pp. 442-476 ◽  
Author(s):  
JOHN D FELDMANN
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Monetary System ◽  
The Us ◽  
Recognition Theory ◽  
Dominant Actor ◽  
Political Economic ◽  
Global Monetary System ◽  
Monetary Rules ◽  
Rules Of The Game

Abstract:This article examines the ongoing conflict in the global monetary system as a struggle over norms of recognition between the US Federal Reserve and the emerging market economies. The analysis demonstrates that the Fed, though dominant actor in the global monetary system, adopts a US-centric perspective and relies upon inadequate economic constructs that misrecognise periphery members and justify a dismissal of criticisms of its monetary policy actions. The article shows how the adoption of recognition principles in reconstituting the monetary rules of the game would provide the Fed with an understanding of the political economic essentials of member countries, a greater awareness of potential harms of its monetary policy actions and the importance of cooperation in reducing conflict and mitigating episodes of monetary instability.

scholarly journals Spillovers of US unconventional monetary policy: quantitative easing, spreads, and international financial markets

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Zekeriya Yildirim ◽  
Mehmet Ivrendi
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Risk Taking ◽  
Large Scale ◽  
Emerging Market ◽  
Spillover Effects ◽  
International Financial Markets ◽  
Quantitative Easing ◽  
Unconventional Monetary Policy ◽  
The Us

AbstractThis study investigates the international spillover effects of US unconventional monetary policy (UMP)—frequently called large-scale asset purchases or quantitative easing (QE)—on advanced and emerging market economies, using structural vector autoregressive models with high-frequency daily data. Blinder (Federal Reserve Bank of St. Louis Rev 92(6): 465–479, 2010) argued that the QE measures primarily aim to reduce US interest rate spreads, such as term and risk premiums. Considering this argument and recent empirical evidence, we use two spreads as indicators of US UMP: the mortgage and term spreads. Based on data from 20 emerging and 20 advanced countries, our empirical findings reveal that US unconventional monetary policies significantly affect financial conditions in emerging and advanced countries by altering the risk-taking behavior of investors. This result suggests that the risk-taking channel plays an important role in transmitting the effects of these policies to the rest of the world. The extent of these effects depends on the type of QE measures. QE measures such as purchases of private sector securities that lower the US mortgage spread exert stronger and more significant spillover effects on international financial markets than those that reduce the US term spread. Furthermore, the estimated financial spillovers vary substantially across countries and between and within the emerging and advanced countries that we examine in this study.

Turkey’s new economic team acts to restore credibility

2020 ◽  
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Interest Rates ◽  
Late Stage ◽  
Emerging Market ◽  
Content Type ◽  
Finance Minister ◽  
The Us ◽  
Multiple Interest ◽  
The Eu

Significance In one of the most significant changes in direction in a major emerging market (EM) in recent years, newly appointed TCMB Governor Naci Agbal has tightened monetary policy dramatically while abandoning a convoluted system of multiple interest rates. With another technocrat, Lufti Elvan, appointed finance minister, monetary policy could be returning to normality. Impacts A Biden administration is expected to prove unaccommodating towards Turkey, especially given its purchase of a Russian air defence system. This may be leading Erdogan to extend feelers to the EU, recently promising reforms and insisting Turkey is an “inseparable” part of Europe. Anti-coronavirus vaccines’ late-stage trial results are encouraging market optimism, with the US stock market hitting a record this month.

Emerging market capital flows may stabilise in 2016

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Capital Flows ◽  
Direct Investment ◽  
Emerging Market ◽  
Content Type ◽  
Global Capital ◽  
Cross Border ◽  
The Us ◽  
Global Growth ◽  
Economic Outlook

Subject Outlook for global capital flows. Significance Foreign direct investment (FDI) into emerging markets (EMs) rose slightly in 2015, according to the latest UNCTAD report on capital flows, as the growth of FDI in Asia offset losses in other areas. In the light of this, fears of a collapse in global capital flows in 2016, exacerbated by poor global growth, the commodity sell-off and the risks associated with the US monetary policy tightening, may prove excessive. Impacts The sharp divergence in capital flow trends will continue, punishing energy and commodity producers. India may experience robust FDI increases, illustrating that not all EMs are out of favour. Any improvement in the global economic outlook will translate into stronger cross-border flows.

Waning monetary policy effectiveness will fire debate

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Main Interest ◽  
Domestic Activity ◽  
Content Type ◽  
Emerging Nations ◽  
The Us ◽  
Bond Funds ◽  
Monetary Policy Effectiveness ◽  
First Time

Significance This closely followed the decision by the US Federal Reserve (Fed) to cut its main interest rate for the first time in more than a decade, accentuating investor concerns about the credibility and efficacy of monetary policy in major economies. The 0.25% cut was more modest than bond traders wanted, but having been prompted by economic weakness abroad, it is at odds with the solid domestic activity that some of the Fed’s own policymakers believe warrants keeping rates on hold. Impacts The benchmark ten-year US Treasury yield has fallen to its lowest since November 2016 and the uncertain outlook means it may fall further. Emerging market bond funds have enjoyed eight weeks of inflows and investors will continue to seek higher-yielding opportunities. More than 30 central banks in advanced and emerging nations have cut rates since the Fed’s dovish pivot in January; this number will rise.

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