Coping in the subprime region

Gabor, Daniela

Abstract

This paper focuses on Eastern Europe’s experience before and during the 2007-2009 crisis to discuss emerging countries’ options to address global liquidity cycles. It argues that sequencing strategies envisaging capital controls as last-resort option can have perverse effects where banks play multiple roles: from intermediaries of capital inflows to directly accessing global interbank markets to fund foreign-currency lending. A strategy combining sterilizations at long-term maturities with the creation of narrow banks to support sovereign debt dynamics and caps on foreign-currency exposure would contain banks’ involvement in carry trades, curb innovations seeking to circumvent capital controls and restore policy autonomy.

• Journal Article Type: Article
• Journal: The Journal of Development Studies
• Print ISSN: 0022-0388
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Not Peer Reviewed
• Keywords: emerging countries, financial crisis, central bank liquidity management, quantitative easing, financialized globalization, sovereign debt markets
• Public URL: https://uwe-repository.worktribe.com/output/984942
• Publisher URL: http://www.informaworld.com/smpp/title~content=t713395137~db=all