Monetary aggregates and the central bank's financial stability mandate

Hyun Jeong Kim, Hyun Song Shin, Jaeho Yun

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

Money is the balance sheet counterpart to bank lending. As such, highly procyclical components of money reflect incremental bank lending that may reverse abruptly as financial conditions deteriorate. Components of monetary aggregates that correspond to cross-border banking sector flows depend sensitively on both domestic and global financial factors and display a procyclical pattern that may be utilized in constructing a set of indicators of the vulnerability of the financial system to crises. We illustrate our arguments by drawing on the experience of Korea and by presenting an empirical analysis of crossborder banking flows into "demand-pull" and "supply-push" components.

Original languageEnglish
Pages (from-to)69-107
Number of pages39
JournalInternational Journal of Central Banking
Volume9
Issue numberSUPPL.1
StatePublished - Jan 2013

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