Structured derivatives contracts, hedging exchange appreciation and financial instabilityBrail, China and Korea

Resumo

There has been a great deal of discussion recently over the use of exchange rates to ameliorate international imbalances. At the same time many developed countries have embarked a highly expansionary monetary policies, expanding the types and amounts of securities held on central bank balance sheets and attempting to use these purchased to alter the shape of the yield curve by buying medium and longer term securities. These two policies are inter‐related since effective monetary expansion and zero short term interest rates accompanied by extremely low medium term interest encourage interest rate arbitrage and a reach for yield amongst institutional and retail investors which tends to increase exchange rate volatility and produce unidirectional cumulative movements of exchange rates in surplus countries which may cause substantial financial instability in the countries whose currencies are under pressure to appreciate.

Ficha do documento

Tipo

Outro

Ano

2011

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Não informado

Identificador

oai:repositorio.fgv.br:10438/16282

Temas

Economia

Palavras-chave

EconomiaPolítica econômica