Since the beginning of the 2000s, emerging market economies, or middle-income countries, have embarked on major changes in their domestic financial systems. These changes – in which central banks have been key players – are shaped by the process of financialisation, which can generally be characterised by the dominance of financial considerations in the conduct of major agents (banks, non-financial corporations and households). As a consequence of the emerging markets crisis at the end of the 1990s, a new phenomenon in global financial markets emerged: a massive accumulation of foreign reserves in emerging economies. This has had important consequences for the global economy in which developed economies are the major beneficiaries.
Based on Marxist political economy, this book studies the trends towards financialisation in emerging economies, focusing on the effects of the reserve accumulation in their international and domestic spheres. It argues that reserve accumulation has been the very catalyst of financialisation, being related to the subordinated position of emerging economies in the international monetary system. The chapters explore how these trends were exacerbated by the 2008 global financial crisis as well as the extraordinary monetary measures undertaken by the major central banks to deal with the effects of this. Foreign investors invested an enormous amount into emerging economies between 2010 and 2012 and emerging-market financial assets have doubled since 2008. To conclude, the book discusses how the US monetary policy normalisation has added more complexity to these trends since 2013 by putting pressure on emerging markets related to the level of global liquidity.
This book provides essential reading for students and scholars of finance, economics and political economy who are interested in the unfolding of the subordinated financial integration of emerging economies into global financial markets.
Table of Contents
PART I Setting the scene on financialisation in emerging market economies – financialisation and liquidity management: challenges to central banking in contemporary capitalism 1 Some notes on financialisation and a brief outline of the book; 2 Political economy of financialisation: considerations on banks; 3 Political economy of central banks: loanable capital movement and inflation-targeting regime; 4 Emerging economies in the era of financialisation: from deficit accumulation to reserve accumulation; PART II Major emerging markets’ experiences across the global financial markets 5 A political economy analysis of central banks in the Brazilian and Korean economies: reserve accumulation, global financial crisis and monetary quantitative easing; 6 Loanable capital movement in Brazil and South Korea: impacts on banks’ balance sheet and some considerations on economic development; 7 Loanable capital movement in selected emerging market economies countries: international capital flows, reserve accumulation, impacts on banks’ portfolio and some considerations on economic development
Juan Pablo Painceira is Senior Advisor in the Open Market Operations Department (DEMAB) at the Brazilian Central Bank (BCB).