On December 12, 2019, Fed in Print will introduce its new platform for discovering content. Please direct your questions to Anna Oates

Home About Latest Browse RSS Advanced Search

Board of Governors of the Federal Reserve System (US)
Finance and Economics Discussion Series
The Currency Dimension of the Bank Lending Channel in International Monetary Transmission
Elod Takats
Judit Temesvary
Abstract

We investigate how the use of a currency transmits monetary policy shocks in the global banking system. We use newly available unique data on the bilateral cross-border lending flows of 27 BIS-reporting lending banking systems to over 50 borrowing countries, broken down by currency denomination (USD, EUR and JPY). We have three main findings. First, monetary shocks in a currency significantly affect cross-border lending flows in that currency, even when neither the lending banking system nor the borrowing country uses that currency as their own. Second, this transmission works mainly through lending to non-banks. Third, this currency dimension of the bank lending channel works similarly across the three currencies suggesting that the cross-border bank lending channel of liquidity shock transmission may not be unique to lending in USD.


Download Full text
Cite this item
Elod Takats & Judit Temesvary, The Currency Dimension of the Bank Lending Channel in International Monetary Transmission, Board of Governors of the Federal Reserve System (US), Finance and Economics Discussion Series 2017-001, Jan 2017.
More from this series
JEL Classification:
Subject headings:
Keywords: Bank lending channel ; Cross-border bank lending ; Currency denomination ; Monetary transmission
DOI: 10.17016/FEDS.2017.001
For corrections, contact Ryan Wolfslayer ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal