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Strong fluctuations in global liquidity have emerged as a consequence of shifts in monetary policy in advanced economies, swings in global risk aversion and the extension of cross-border credit. From the perspective of SEACEN economies, the ups and downs in global liquidity pose a challenge to monetary, fscal, regulatory and macroprudential policies:
Sudden increases of global liquidity lead to a domestic boom in economic activity, a surge in asset prices and an appreciation of the exchange rate against the US dollar.
Spillovers through global liquidity are not constant over time. They can turn out to be strong or weak depending on global fnancial conditions, the domestic macroeconomic environment and the policy responses taken. Likewise, the channels through which global liquidity affects emerging markets vary over time in their importance.
The policy responses taken in SEACEN member economies are diverse. This reflects the fact that the effects of global liquidity, while broadly similar with regard to the core macroeconomic variables, gives rise to wide range of country-specifc challenges. Policymakers are concerned about overheating property markets, an overly leveraged fnancial system, foreign currency borrowing, among many other facets of global liquidity, and should design policies directed towards these specifc challenges.
In this environment, searching for a “one-size-fts-all” policy response is misleading. While it is generally acknowledged that healthy macroeconomic fundamentals reduce the exposure to swings in global liquidity, the specifc policies directed towards maintaining fnancial stability will likely to be diverse.
Chapter 1 GLOBAL LIQUIDITY AND THE IMPACT ON SEACEN ECONOMIES: AN INTEGRATIVE REPORT
By Peter Tillmann
Chapter 2 THE INDIRECT TRANSMISSION OF GLOBAL LIQUIDITY: THE CASE OF CAMBODIA
By Raksmey Uch
Chapter 3 SPILLOVER EFFECTS OF GLOBAL LIQUIDITY ON INDONESIA
By Berry A. Harahap and Pakasa Bary
Chapter 4 FX RELATED MACROPRUDENTIAL POLICIES IN KOREA: A STUDY ON THE EFFECT OF THE FX DERIVATIVES POSITION RATIO POLICY ON THE BANKS’ FOREIGN BORROWINGS
By Moon Woo Hwang
Chapter 5 GLOBAL LIQUIDITY: DOES IT MATTER FOR MONGOLIA?
By Tsenguunjav Byambasuren
Chapter 6 THE THREE PHASES OF GLOBAL LIQUIDITY AND THE PHILIPPINE CASE
By Ruby Anne E. Lemence
Chapter 7 SPILLOVER OF GLOBAL LIQUIDITY IMBALANCES TO CURRENCY MARKETS: AN EMERGING ECONOMY PERSPECTIVE
By Sumila Tharanga Wanaguru, Ph.D
Chapter 8 GLOBAL LIQUIDITY CONNECTEDNESS: EVIDENCE FROM SEACEN MEMBERS
By Jyun-Yi Wu
Chapter 9 THE IMPACT OF GLOBAL LIQUIDITY ON THE ECONOMY OF VIETNAM
By Pham Xuan Lam and Chu Khanh Lan
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