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Global liquidity and dollar debts of emerging market corporates


Viral Acharya, Stephen Cecchetti, José De Gregorio, Sebnem Kalemli-Ozcan, Philip Lane, Ugo Panizza
A recent report by a working party of Robert Triffin International documented the major financial stability risks created by the post-Global Crisis surge in dollar liquidity (RTI 2019). The worry then (in December 2019) was the same as that of Acharya et al. (2015) – that an eventual rise in dollar interest rates would hurt non-US companies which had borrowed dollars. “The risk of an unexpected and unplanned reversal of abundant global liquidity,” it warned, “hangs over the world economy.” The dollar bonds issued by emerging market economy (EME) corporates seemed most at risk. ....

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