Unconventional Monetary Policies in Emerging Markets and Frontier Countries

By Chiara Fratto, Brendan Harnoys Vannier, Borislava Mircheva, Helene Poirson

January 22, 2021

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Chiara Fratto, Brendan Harnoys Vannier, Borislava Mircheva, and Helene Poirson. Unconventional Monetary Policies in Emerging Markets and Frontier Countries, (USA: International Monetary Fund, 2021) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The COVID-19 crisis induced an unprecedented launch of unconventional monetary policy through asset purchase programs (APPs) by emerging market and developing economies. This paper presents a new dataset of APP announcements and implementation from March until August 2020 for 27 emerging markets and 8 small advanced economies. APPs’ effects on bond yields, exchange rates, equities, and debt spreads are estimated using different methodologies. The results confirm that APPs were successful in significantly reducing bond yields in EMDEs, and these effects were stronger than those of policy rate cuts, suggesting that such UMP could be important tools for EMDEs during financial market stress.

Subject: Bond yields, Bonds, Exchange rates, Financial institutions, Financial services, Securities, Sovereign bonds, Yield curve

Keywords: Africa, App announcement, Bond yields, Bonds, CB credibility, CB intervention, CB monetary policy stance, CB transparency, COVID-19, Emerging markets, Exchange rates, Global, Local currency bond markets., Market dysfunctionalities, Market functioning, Market mechanism, Market participant, Markets query, Securities, Sovereign bonds, Tackling market dysfunctionality, Transparency Index, Unconventional monetary policy, WP, Yield curve

Publication Details

Pages:

71
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2021/014
Stock No:

WPIEA2021014
ISBN:

9781513567211
ISSN:

1018-5941

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