A Chinese political advisor on Saturday warned a continued over- expectation for the appreciation of the Chinese currency Yuan would bring in more inflows of hot money and worsen the already excessive liquidity.
Because the U.S. Federal Reserve＇s monetary policy is at the center of the world dollar standard, it has a first-order impact on global financial stability. However, except during international crises, the Fed focuse...Because the U.S. Federal Reserve＇s monetary policy is at the center of the world dollar standard, it has a first-order impact on global financial stability. However, except during international crises, the Fed focuses on domestic American economic indicators and generally ignores collateral damage from its monetary policies on the rest of the world. Currently, ultra-low interest rates on short-term dollar assets ignite waves of hot money into Emerging Markets （EM） with convertible currencies. When each EM central bank intervenes to prevent its individual currency from appreciating, collectively they lose monetary control, inflate, and cause an upsurge in primary commodity prices internationally. These bubbles burst when some accident at the center, such as a banking crisis, causes a return of the hot money to the United States （and to other industrial countries） as commercial banks stop lending to foreign exchange speculators. World prices of primary products then collapse. African countries with exchange controls and less convertible currencies are not so attractive to currency speculators. Thus, they are less vulnerable than EM to the ebb and flow of hot money. However, Afi-ican countries are more vulnerable to cycles in primary commodity prices because food is a greater proportion of their consumption, and--being less industrialized--they are of their commodity exports. Supply-side more vulnerable to fluctuations in prices shocks, such as a crop failure anywhere in the world, can affect the price of an individual commodity. But joint fluctuations in the prices of all primary products--minerals, energy, cereals, and so on--reflect monetary conditions in the world economy as determined by the ebb and flow of hot money from the United States, and increasingly from other industrial countries with near-zero interest rates.展开更多
Amid uncertainties about the amount of hot money,the government strives to curb the harmful capital The benchmark Shanghai Composite Index was plagued by dips, climbs and dives as the stock market slumped from 3,186 t...Amid uncertainties about the amount of hot money,the government strives to curb the harmful capital The benchmark Shanghai Composite Index was plagued by dips, climbs and dives as the stock market slumped from 3,186 to 2,838展开更多
Under near-zero US interest rates, the international dollar standard malfunctions. Emerging markets with naturally higher interest rates are swamped with hot money inflows. Emerging market central banks intervene to p...Under near-zero US interest rates, the international dollar standard malfunctions. Emerging markets with naturally higher interest rates are swamped with hot money inflows. Emerging market central banks intervene to prevent their currencies from rising precipitately. They lose monetary control and domestic prices begin inflating. Primary commodity prices rise worldwide unless interrupted by an international banking crisis＇. This cyclical inflation on the dollar＇s periphery only registers in the US core eonsumer price index with a long lag. The zero interest rate policy also fails to stimulate the US economy as domestic finaneial intermediation by banks and money market mutual funds is repressed. Because China is forced to keep its interest rates below market-clearing levels, it also suffers from finaneial repression, although in a form differing from that in the USA.展开更多
This paper investigates the link between hot money and business cycle volatility in China from January 1997 to December 2009. Using the structural vector error correction model we find a considerable degree of long-ru...This paper investigates the link between hot money and business cycle volatility in China from January 1997 to December 2009. Using the structural vector error correction model we find a considerable degree of long-run cointegration and bidirectional causality effects between hot money and business cycle volatility. The speculative shocks are found to temporarily promote China＇s economic growth, but also to exacerbate business cycle volatility. The liquidity shock stemming from hot money is shown to be the primary factor responsible for the significantly enhanced fluctuation in business cycles during the most recent global financial crisis period This could be detrimental to the smooth operation of financial markets. Therefore, informing future policies, it is critical for policy-makers to take precautions against the speculative factors.展开更多
The huge influx of international hot money is threatening inflation and affecting the country’s monetary policy In the last three months, the country’s financial supervisory departments have conducted frequent but a...The huge influx of international hot money is threatening inflation and affecting the country’s monetary policy In the last three months, the country’s financial supervisory departments have conducted frequent but atypical investi-gations of hot money.展开更多
After emerging from the economic doldrums, developing economies are now confronted with a new danger-a flood of international hot money. But how has the speculative capital circumvented regulatory controls and what ar...After emerging from the economic doldrums, developing economies are now confronted with a new danger-a flood of international hot money. But how has the speculative capital circumvented regulatory controls and what are the consequences concerning the stability of the developing world? Zhao Zhongwei, a senior researcher with the Institute of World Politics and Economics at the Chinese Academy of Social Sciences, discussed these issues in an article recently published in the China Securities Journal. Edited excerpts展开更多
The U.S. Federal Reserve's monetary policy at the center of the world dollar standard has a first-order impact on global financial stability. However, except in moments of international crises, the Fed focuses inw...The U.S. Federal Reserve's monetary policy at the center of the world dollar standard has a first-order impact on global financial stability. However, except in moments of international crises, the Fed focuses inward on domestic American economic indicators and generally ignores collateral damage from its monetary policies in the rest of the world. But this makes the U.S. economy less stable. Currently, ultra-low interest rates on dollar assets ignite waves of hot money into emerging markets by carry traders that generate bubbles in international primary commodity prices and other assets. These bubbles burst when some accident at the center, such as a banking crisis, causes a reflux of the hot money. Ironically, these near-zero interest rates hold back investment in the American economy itself.展开更多
文摘A Chinese political advisor on Saturday warned a continued over- expectation for the appreciation of the Chinese currency Yuan would bring in more inflows of hot money and worsen the already excessive liquidity.
文摘Because the U.S. Federal Reserve＇s monetary policy is at the center of the world dollar standard, it has a first-order impact on global financial stability. However, except during international crises, the Fed focuses on domestic American economic indicators and generally ignores collateral damage from its monetary policies on the rest of the world. Currently, ultra-low interest rates on short-term dollar assets ignite waves of hot money into Emerging Markets （EM） with convertible currencies. When each EM central bank intervenes to prevent its individual currency from appreciating, collectively they lose monetary control, inflate, and cause an upsurge in primary commodity prices internationally. These bubbles burst when some accident at the center, such as a banking crisis, causes a return of the hot money to the United States （and to other industrial countries） as commercial banks stop lending to foreign exchange speculators. World prices of primary products then collapse. African countries with exchange controls and less convertible currencies are not so attractive to currency speculators. Thus, they are less vulnerable than EM to the ebb and flow of hot money. However, Afi-ican countries are more vulnerable to cycles in primary commodity prices because food is a greater proportion of their consumption, and--being less industrialized--they are of their commodity exports. Supply-side more vulnerable to fluctuations in prices shocks, such as a crop failure anywhere in the world, can affect the price of an individual commodity. But joint fluctuations in the prices of all primary products--minerals, energy, cereals, and so on--reflect monetary conditions in the world economy as determined by the ebb and flow of hot money from the United States, and increasingly from other industrial countries with near-zero interest rates.
文摘Amid uncertainties about the amount of hot money,the government strives to curb the harmful capital The benchmark Shanghai Composite Index was plagued by dips, climbs and dives as the stock market slumped from 3,186 to 2,838
文摘Under near-zero US interest rates, the international dollar standard malfunctions. Emerging markets with naturally higher interest rates are swamped with hot money inflows. Emerging market central banks intervene to prevent their currencies from rising precipitately. They lose monetary control and domestic prices begin inflating. Primary commodity prices rise worldwide unless interrupted by an international banking crisis＇. This cyclical inflation on the dollar＇s periphery only registers in the US core eonsumer price index with a long lag. The zero interest rate policy also fails to stimulate the US economy as domestic finaneial intermediation by banks and money market mutual funds is repressed. Because China is forced to keep its interest rates below market-clearing levels, it also suffers from finaneial repression, although in a form differing from that in the USA.
基金supported by the Program for New Century Excellent Talents in University(NCET) of China
文摘This paper investigates the link between hot money and business cycle volatility in China from January 1997 to December 2009. Using the structural vector error correction model we find a considerable degree of long-run cointegration and bidirectional causality effects between hot money and business cycle volatility. The speculative shocks are found to temporarily promote China＇s economic growth, but also to exacerbate business cycle volatility. The liquidity shock stemming from hot money is shown to be the primary factor responsible for the significantly enhanced fluctuation in business cycles during the most recent global financial crisis period This could be detrimental to the smooth operation of financial markets. Therefore, informing future policies, it is critical for policy-makers to take precautions against the speculative factors.
文摘The huge influx of international hot money is threatening inflation and affecting the country’s monetary policy In the last three months, the country’s financial supervisory departments have conducted frequent but atypical investi-gations of hot money.
文摘After emerging from the economic doldrums, developing economies are now confronted with a new danger-a flood of international hot money. But how has the speculative capital circumvented regulatory controls and what are the consequences concerning the stability of the developing world? Zhao Zhongwei, a senior researcher with the Institute of World Politics and Economics at the Chinese Academy of Social Sciences, discussed these issues in an article recently published in the China Securities Journal. Edited excerpts
文摘The U.S. Federal Reserve's monetary policy at the center of the world dollar standard has a first-order impact on global financial stability. However, except in moments of international crises, the Fed focuses inward on domestic American economic indicators and generally ignores collateral damage from its monetary policies in the rest of the world. But this makes the U.S. economy less stable. Currently, ultra-low interest rates on dollar assets ignite waves of hot money into emerging markets by carry traders that generate bubbles in international primary commodity prices and other assets. These bubbles burst when some accident at the center, such as a banking crisis, causes a reflux of the hot money. Ironically, these near-zero interest rates hold back investment in the American economy itself.
