Unconventional Monetary Policies in Emerging Markets and Frontier Countries

Author: Chiara Fratto, Brendan Harnoys Vannier, Miss Borislava Mircheva, David de Padua, and Ms. Helene Poirson Ward

Volume/Issue: Volume 2021 Issue 014

Publication date: January 2021

ISBN: 9781513567211

$18.00

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Topics covered in this book

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Banks and Banking , Investments and Securities-General , Unconventional monetary policy , emerging markets , COVID-19 , local currency bond markets , , WP , market dysfunctionalities , app announcement , CB transparency , market functioning , markets query , tackling market dysfunctionality , transparency Index , exchange rates , market mechanism , CB credibility , market participant , CB intervention , CB monetary policy stance , Sovereign bonds , Bond yields , Yield curve , Securities , Bonds , Africa , Global

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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.