Date published: May 2017
SUERF Policy Note, Issue No 12
by Matthieu Bussière, Banque de France; Julia Schmidt, Banque de France; Natacha Valla, European Investment Bank and Paris School of Economics
Many worry that international capital flows could have permanently retrenched and structurally become more volatile in the post 2008 period. This Suerf Policy Note highlights facts suggesting this may not be the case. While the literature acknowledges the importance of gross capital flows to understand international financial dynamics, there is little consensus about the post-crisis “new normal” of international capital flows. Particularly reassuring is the stability and resilience of “equity-like” cross border financial flows. Far from having massively retrenched, these have kept a healthy momentum and offset the meltdown of bank and debt international financing. The emerging world is set to benefit from this trend.
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