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Coping in the subprime region

Gabor, Daniela

Authors



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Peer Reviewed Not Peer Reviewed
APA6 Citation Gabor, D. Coping in the subprime region. Journal of Development Studies,
Keywords emerging countries, financial crisis, central bank liquidity management, quantitative easing, financialized globalization, sovereign debt markets
Publisher URL http://www.informaworld.com/smpp/title~content=t713395137~db=all