Emergent international liquidity agreements: central bank cooperation after the global financial crisis

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

Central bank currency swap agreements have proliferated rapidly among emerging market economies (EMEs) since 2008. More than 80 such agreements have been signed in recent years. The accumulation of these agreements has resulted in the emergence of a new $1 trillion liquidity system by 2015. What explains the rapid proliferation of these agreements? What are the political and economic implications of the liquidity network for the international monetary system and the global financial architecture? I specify two key consequences of the global financial crisis and its aftermath that have led EME central banks to seek out swap agreements: volatile international capital flows and a recognition of the risks of dollar dependence in trade. I conclude that these liquidity agreements are unlikely to induce much change in the international monetary system. However, the system is transforming the global financial architecture through the creation of large liquidity lines for systemically important EMEs.

Original languageEnglish (US)
Pages (from-to)1-27
Number of pages27
JournalJournal of International Relations and Development
DOIs
StateAccepted/In press - Jun 13 2017

Fingerprint

central bank
international agreement
liquidity
financial crisis
market economy
international monetary system
capital flow
currency
capital movement
dollar
proliferation
economics
co-operation

Keywords

  • Capital flows
  • Central banking
  • Exchange rates
  • Financial architecture
  • Financial crises

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Political Science and International Relations

Cite this

@article{bba1127c6ea3456d89f565c0c3b10780,
title = "Emergent international liquidity agreements: central bank cooperation after the global financial crisis",
abstract = "Central bank currency swap agreements have proliferated rapidly among emerging market economies (EMEs) since 2008. More than 80 such agreements have been signed in recent years. The accumulation of these agreements has resulted in the emergence of a new $1 trillion liquidity system by 2015. What explains the rapid proliferation of these agreements? What are the political and economic implications of the liquidity network for the international monetary system and the global financial architecture? I specify two key consequences of the global financial crisis and its aftermath that have led EME central banks to seek out swap agreements: volatile international capital flows and a recognition of the risks of dollar dependence in trade. I conclude that these liquidity agreements are unlikely to induce much change in the international monetary system. However, the system is transforming the global financial architecture through the creation of large liquidity lines for systemically important EMEs.",
keywords = "Capital flows, Central banking, Exchange rates, Financial architecture, Financial crises",
author = "McDowell, {Daniel Edwin}",
year = "2017",
month = "6",
day = "13",
doi = "10.1057/s41268-017-0106-0",
language = "English (US)",
pages = "1--27",
journal = "Journal of International Relations and Development",
issn = "1408-6980",
publisher = "Palgrave Macmillan Ltd.",

}

TY - JOUR

T1 - Emergent international liquidity agreements

T2 - central bank cooperation after the global financial crisis

AU - McDowell, Daniel Edwin

PY - 2017/6/13

Y1 - 2017/6/13

N2 - Central bank currency swap agreements have proliferated rapidly among emerging market economies (EMEs) since 2008. More than 80 such agreements have been signed in recent years. The accumulation of these agreements has resulted in the emergence of a new $1 trillion liquidity system by 2015. What explains the rapid proliferation of these agreements? What are the political and economic implications of the liquidity network for the international monetary system and the global financial architecture? I specify two key consequences of the global financial crisis and its aftermath that have led EME central banks to seek out swap agreements: volatile international capital flows and a recognition of the risks of dollar dependence in trade. I conclude that these liquidity agreements are unlikely to induce much change in the international monetary system. However, the system is transforming the global financial architecture through the creation of large liquidity lines for systemically important EMEs.

AB - Central bank currency swap agreements have proliferated rapidly among emerging market economies (EMEs) since 2008. More than 80 such agreements have been signed in recent years. The accumulation of these agreements has resulted in the emergence of a new $1 trillion liquidity system by 2015. What explains the rapid proliferation of these agreements? What are the political and economic implications of the liquidity network for the international monetary system and the global financial architecture? I specify two key consequences of the global financial crisis and its aftermath that have led EME central banks to seek out swap agreements: volatile international capital flows and a recognition of the risks of dollar dependence in trade. I conclude that these liquidity agreements are unlikely to induce much change in the international monetary system. However, the system is transforming the global financial architecture through the creation of large liquidity lines for systemically important EMEs.

KW - Capital flows

KW - Central banking

KW - Exchange rates

KW - Financial architecture

KW - Financial crises

UR - http://www.scopus.com/inward/record.url?scp=85020725332&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85020725332&partnerID=8YFLogxK

U2 - 10.1057/s41268-017-0106-0

DO - 10.1057/s41268-017-0106-0

M3 - Article

SP - 1

EP - 27

JO - Journal of International Relations and Development

JF - Journal of International Relations and Development

SN - 1408-6980

ER -