Exchange-rate regimes for emerging markets: moral hazard and international overborrowing

1999 ◽  
Vol 15 (3) ◽  
pp. 19-38 ◽  
Author(s):  
R. McKinnon
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Moral Hazard ◽  
Exchange Rate Regimes

China supplants Fed as main risk to EMs

2015 ◽  
Keyword(s):  
Exchange Rate ◽  
Middle East ◽  
Emerging Markets ◽  
Interest Rates ◽  
Futures Markets ◽  
Exchange Rate Regimes ◽  
Content Type ◽  
Fixed Exchange Rate ◽  
Market Turbulence

Significance While futures markets are assigning a 28% probability to a rate hike this month, emerging markets (EMs) are likely to remain under strain regardless of whether the Fed tightens policy or decides to wait longer. While a rate hike in September is likely to strengthen the dollar, putting further pressure on EM currencies, a delay risks being perceived by investors as an indication of the severity of the China-induced market turbulence. Impacts The rise in US interest rates has been well anticipated and will prove less disorderly than the 2013 'taper tantrum'. The strong dollar will put strain on fixed exchange rate regimes, such as dollar pegs in Africa and the Middle East. The benefits to EM exports from the declines in local currencies will be offset by the slump in China's demand.

scholarly journals Global Financial Cycles and the Exchange Rate Regime: A Perspective from Emerging Markets

2018 ◽  
Vol 108 ◽  
pp. 499-504 ◽  
Author(s):  
Maurice Obstfeld ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
Exchange Rate Regimes ◽  
Exchange Rate Flexibility ◽  
Macroeconomic Conditions ◽  
Financial Conditions ◽  
Advanced Economies ◽  
Financial Cycles

This paper examines the claim that exchange rate regimes are of little relevance in the transmission of global financial conditions to domestic financial and macroeconomic conditions. Our findings suggest that exchange rate regimes do matter, at least for emerging market economies. The transmission of global financial shocks to domestic variables is magnified under fixed exchange rate regimes relative to more flexible regimes. For advanced economies, however, the jury is still out, as the recent paucity of truly fixed regimes among these economies poses a challenge for estimating the effect of exchange rate flexibility.

scholarly journals Inflation Targeting and Exchange Rate Regimes in Emerging Markets

2015 ◽  
Vol 15 (228) ◽  
pp. 1 ◽  
Author(s):  
Christian Ebeke ◽  
Armand Fouejieu ◽  
◽  
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
Exchange Rate Regimes

scholarly journals Volatilité des chocs et degré de flexibilité du taux de change

2007 ◽  
Vol 54 (3) ◽  
pp. 271-301 ◽  
Author(s):  
Jean-Pierre Allegret ◽  
Mohamed Ayadi ◽  
Leila Haouaoui
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Capital Mobility ◽  
Financial Integration ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
International Capital Mobility ◽  
International Financial Integration ◽  
The Exchange Rate ◽  
Almost All

During the 90s emerging markets have been hit by recurrent exchange rate crises. Almost all these countries shared a common characteristic: they adopted in previous years soft pegs, the so-called intermediate exchange rate regimes. International institutions and academic economists interpreted this intrinsic fragility of soft pegs as a consequence of the increasing international capital mobility. From this perspective, the exchange-rate regime is seen as constrained by the monetary policy trilemma, which imposes a stark trade-off among exchange stability, monetary independence, and capital market openness. Soft pegs seem incompatible with international financial integration. As a result, a new consensus appeared: the choice of domestic authorities is limited to corner solutions: hard pegs on the one side; independent floating on the other side. This paper proposes a contribution to the analysis of exchange rate regimes choice by emerging markets. The new consensus is questioned by considering that emerging countries are confronted not in the choice between extreme solutions, but rather with the choice of the degree of fixity- or the degree of flexibility- of the exchange rate.

scholarly journals The Information Content in Bank Currency Mismatches in Fixed Exchange Rate Regimes

2012 ◽  
Vol 2012 ◽  
pp. 1-4
Author(s):  
Victoria Miller
Keyword(s):  
Exchange Rate ◽  
Moral Hazard ◽  
Financial Markets ◽  
Information Content ◽  
Risk Taking ◽  
Exchange Rate Regimes ◽  
The Third ◽  
Hazard Risk ◽  
Fixed Exchange Rate ◽  
Currency Mismatches

Banks tend to leave their currency exposures uncovered in fixed and “intermediate” exchange rate regimes. The paper asks why this is the case. There are three possible explanations: First, hedges are costly and the currency peg is credible; Second, financial markets are incomplete and so hedging instruments are unavailable; or third, hedges are costly and banks expect a bailout should currency gyrations threaten their solvency. The paper demonstrates that the third argument is not time consistent and therefore that uncovered currency exposures reflect currency peg credibility or financial incompleteness and not moral-hazard risk taking.

scholarly journals Which currency exchange regime for emerging markets?: Corner solutions under question

2007 ◽  
Vol 54 (4) ◽  
pp. 397-427 ◽  
Author(s):  
Jean-Pierre Allegret
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
International Institutions ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
Emerging Countries ◽  
Currency Exchange ◽  
Corner Solutions ◽  
Exchange Regime

During the 90s, recurrent exchange rate crises in emerging markets have shown the extreme fragility of soft pegs, the so-called intermediate exchange rate regimes. As a result, numerous academic economists but also International institutions have promoted a new consensus: domestic authorities have to choose their exchange rate regime between only two solutions called corner solutions or extreme regimes: hard pegs or independent floating. This paper questions de relevance of this consensus. We stress the main advantages and costs of each corner solution. We conclude by stressing that intermediate regimes associated to an inflation targeting framework seem a better solution for emerging countries than corner solutions.

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