An unprecedented surge in the issuance of international debt securities by emerging market economies (EMEs) in the second half of last year helped boost total U.S. dollar credit to non-bank borrowers outside the United States by 8.3 percent to $11.35 trillion during 2017, according to the Bank for International Settlements (BIS).
Against the backdrop of a depreciation of the U.S. dollar in 20176, the annual growth of U.S. dollar credit to non-bank borrowers in EMEs more than tripled to 10 percent by end-2017 from 3 percent in 2016, mainly driven by international debt securities that grew by an annual 22 percent in the second half of last year.
In contrast, U.S. dollar bank loans, which contracted in 2016, grew by only 2 percent in the second half of last year but still accounted for the majority of the overall stock of $3.7 trillion, said BIS in its latest release of global liquidity indicators.
The availability of global liquidity reflects the ease of financing and is considered one of the factors in the build-up of financial imbalances ahead of the global financial crises. The term has also been used in the context of the spill-over effects of monetary conditions in advanced economies to emerging market economies.
In addition to the growth in U.S. dollar credit, foreign currency lending in euros and Japanese yen also grew in the second half of 2017, with euro credit to non-bank borrowers outside the euro area up by 10 percent in 2017 while yen-denominated credit, which contracted in 2016, grew 6 percent, said Swiss-based BIS.
Click to read the full BIS release on global liquidity indicators at end-December 2017.
www.CentralBankNews.info
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