A Study on external imbalances and adjustment mechanism in the Eurozone

2015 Fiscal Year Final Research Report

• Project/Area Number: 25380393
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Money/ Finance
• Research Institution: Kyoto University
• Principal Investigator: Iwamoto Takekazu 京都大学, 経済学研究科(研究院), 教授 (80223428)
• Project Period (FY): 2013-04-01 – 2016-03-31
• Keywords: 資本フロー / 国際投資ポジション / グローバル流動性 / シャドーバンキング / ユーロ

Outline of Final Research Achievements

This study investigated the contrasting capital flows between the US and Europe and between the US and Asian countries before and after the GFC. Based on our analysis, we conclude that a significant impact on the GFC was not current account imbalances, equal to the net capital flows from Asian surplus countries to the US as a deficit country (global saving glut), but the gross capital flows between US and Europe, both of which run current account deficits.
Furthermore, we realized that the gross capital flows from the US to Europe represented the raising of funds through the US MMFs by European banks’ US branches and subsidiaries and then shipping them to their headquarters. These gross capital flows are to a large extent regarded as global liquidity, especially non-core liabilities, supplied by the US shadow banking system, which has two functions: securitization and collateral intermediation.

Free Research Field

国際金融論