After a decade of super easy monetary policy in the G-3 countries, our data show that an EM positioning overhang may have built up, with successive dovish Fed shifts becoming less and less EM positive. Setting aside China, this latest rebound in flows to EM looks weak, with only Indonesia and Mexico seeing meaningful Q1 inflows.

The IIF has responded to the initial consultation of the FSB on the effects of financial regulatory reforms on SME financing.

Non-resident capital flows to MENAP are projected to rise slightly to $215 billion in 2019. Strong fundamentals in key countries, including large financial buffers and low debt, should support flows. Sovereign bond issuance will remain the main source of non-resident capital inflows.

Stretching out policy support; U.S. banks build up holdings of domestic government debt—potential liquidity risk?; Higher U.S. budget deficits will keep net borrowing needs at high levels; Less foreign demand for Treasuries—though domestic demand has remained solid

We have unveiled a new database on EM real money positioning. We begin to add bank-intermediated flows to our database, which comove with real money flows in Turkey and Argentina. The EM positioning overhang may be greater than initially assumed.

The March 2019 IIF Global Regulatory Update provides updates on the Financial Stability Board, current work streams in Regulatory Capital, Recovery and Resolution, Cyber Security, Digital Finance, Sustainable Finance, Insurance and upcoming events. 

Venezuela’s GDP decline is nearly unprecedented, as is the collapse of oil output, its main export. The initial impact of US sanctions was manageable, but history suggests they will have severe effects. Recoveries from oil output collapses tend to be fast, making higher oil revenue feasible if policies change.