The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Does QE go into EM?

How can quantitative easing best alleviate the financial fallout from Covid-19? Unconventional monetary policies make investors in emerging markets uncomfortable – especially in Latin America. Little wonder that central banks are treading a cautious path.

mountain-path-960.jpg

We have become used to this new era of low, falling and synchronized inflation in developed markets and emerging markets, and so the financial system’s allocations are geared to low inflation and no inflation surprises. If investors all have to shuffle their asset allocation in response to an inflation shock, there is just no way they can do that. It would cause havoc in the market.”

So warns Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF), adding that the chance that the growth in the use of quantitative easing in emerging markets might be the source of such inflation-led havoc is “an unlikely scenario”.

But speaking amid the global recession caused by a pandemic, it seems best not to ignore non-probable risks with large negative impacts.

Ribakova says the impact of the global recession and the lack of fiscal space for many emerging markets to respond to twin demand and supply shocks has led to an increase in discussions among emerging markets central banks about the policy options – and implications – of using QE.

“QE


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree