Thread by @elinaribakova

Dollar vs EM currencies is as important if not more for EM policy space as Fed rates.

Great presentation by @HyunSongShin

ecb.europa.eu/pub/conference…

https://twitter.com/m_paulmcnamara/status/1235847608687443968

Capital flow intemediation has from banks to bond markets mostly held by institutional asset managers.

Local market development in #EmergingMarkets should have helped them to move away from the “original sin” @upanizza of borrowing in foreign currency. But holdings of local markets are significantly dominated by global asset managers.

As a result emerging markets even with flexible exchange rates and issuance in local currency have to keep an eye on US$

EM monetary policy has to be conscious of the US$ even when exchange rate is flexible and borrowing is in local currency.

This is one of the motivations behind the discussion @IMFNews regarding the integrated policy framework as fleshed out by @KGeorgieva in her recent FT

IMF chief: we are rethinking our advice to emerging markets ft.com/content/b53468…

And earlier by @GitaGopinath at Jackson Hole imf.org/~/media/Files/… on the use of various tools by emerging markets to address this issue.

Still some #EM worry that the recommendation could be misunderstood as a call for more capital controls.

Governor Alejandro Díaz de León @Banxico at #IIFG20 was clear we need to aim for the first best of deep local markets.

https://twitter.com/iif/status/1231140340746289152?s=21

And a great discussion we had on the topic #IIFDC 2019 with:

🇦🇷 Mauro Alessandro @BancoCentral_AR

🇦🇪 Arif Amiri @DIFC

🇹🇷 Uğur Namık Küçük @CentralBank_TR

🇿🇦 Chris Loewald @SAReserveBank

🇮🇩 Dody Budi Waluyo @bank_indonesia

https://twitter.com/iif/status/1184826537566228480?s=21