COVID-19 and Dollar Funding Strains

Events

COVID-19 and Dollar Funding Strains

08 July 2020

 

The coronavirus disease (COVID-19) pandemic exposes Asian banks’ vulnerability to U.S. dollar funding risks. A sudden squeeze in U.S. dollar funding liquidity associated with unwinding of carry trades by non-US global banks can quickly spill over to emerging market borrowers, as evidenced during the global financial crisis (GFC). Over the past decade, cross-border bank lending denominated dominantly in U.S. dollar has increased across emerging Asian economies, heightening the exposure to global U.S. dollar funding markets. The crisis offers an opportunity for Asia and the world to regain momentum to reform their financial systems and address the underlying vulnerabilities.

This webinar featured a high-level panel of experts who examined the vulnerabilities accompanying the region’s continued growth in cross-border banking activities and explore policy options, including further strengthening of regional financial safety net arrangements, to ensure regional financial stability and resilience moving forward.

(Part 4 of the Asian Impact: ADB Research in Action webinar series)

Program and Learning Materials: 
Date Session / Activity Presentation Material Speaker(s)
08 Jul 2020 Presentation COVID-19 Exposes Asian Banks' Vulnerability to US Dollar Funding
This presentation examined how dollar liquidity strains during the COVID-19 pandemic exhibits a similar pattern to the global financial crisis...
Peter Rosenkranz
08 Jul 2020 Presentation Emerging Markets in a Time of Pandemic
This presentation discussed lessons from the Asian financial crisis in relation to currency and maturity mismatches that are still applicable...
Hyun Song Shin

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