Abstract
Violent shifts in cross-border flows are associated with international financial crises. Cross-border financial markets operating out of global money centres, such as New York and London, can act as amplification mechanisms through carry trades and currency-swaps. These flows tend to move anti-cyclically and expand alongside a weak US dollar. They are often hard to track because experts traditionally focus on net capital flows rather than gross flows. Emerging Markets tend to be large buyers of ‘safe’ assets in the US and Europe, but they are also large borrowers of dollars from Western banking systems, thereby incurring both currency and maturity mismatches between their assets and liabilities. These mismatches can trigger financial crises.
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Howell, M.J. (2020). Cross-Border Capital Flows. In: Capital Wars. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-39288-8_8
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DOI: https://doi.org/10.1007/978-3-030-39288-8_8
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