The “invisible hand” of advanced country central banks in emerging markets

We all know that most emerging market economies have limited policy room to deliver massive counter-cyclical crisis response. This affects their risk perception, investor confidence, and capital inflows. Indeed, most emerging markets have limited fiscal space (except for those with a war chest of international reserves such as China and several other Asian countries, or Chile in Latin America). Untraditional monetary policy/quantitative easing is constrained by concerns over the possible

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In defense of foreign banks

‘Banker’ has recently become somewhat of a dirty word and ‘foreign banker’ a most reviled sub-species. Over the last months foreign banks have, amongst other things, been accused of abandoning some of the emerging markets that have contributed so much to their profitability over the last decade. When the going gets tough, so the story goes, foreign banks quickly cut back their lending abroad and refocus on domestic clients. Indeed,

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The EBRD’s new growth forecasts: “bearish”, or turning point?

Following the release of our latest growth forecasts for the EBRD countries of operations on Thursday, Reuters reported that emerging European currencies had retreated on “bearish EBRD forecasts.”

As the creators of these forecasts, we found this both flattering and dismaying. Flattering, because it is nice to be taken seriously. Dismaying, because it was not the reaction we had hoped for.

So, was the reaction justified? Or, to…

BIS data on cross-border flows – a closer look

Authors: Piroska Nagy (-7149) and Stephan Knobloch (-7065), 5 May 2009.

New BIS data for the last quarter of 2008 show that BIS-reporting banks significantly reduced their asset holdings across major regions of the world. While in absolute terms most of the reduction took place in advanced countries, in relative terms, emerging markets were hit harder. Our region has thus far been least affected. Furthermore, the decline has been concentrated…

The crisis has changed the EBRD

The debates among the G20 leaders about global architecture and the crisis response of the international institutions may seem abstract and removed from the concerns of most people. But the discussions are very real to those of us working in these institutions as we prepare to meet our key stakeholders at our Annual Meetings on May 15-16 in London.

The crisis has changed the way we operate. Today’s EBRD…

About EBRD

The European Bank for Reconstruction and Development(EBRD) uses the tools of investment to help build market economies and democracies in countries from central Europe to central Asia (read more).