Allow me to share this ADB blog written by Donghyun Park and Irfan A. Qureshi. Based on our recent joint publication in the Journal of International Money and Finance, with Joshua Aizenman and Gazi Salah Uddin:
The global impact of US monetary policy significantly affects capital flows and credit growth in emerging markets, highlighting the importance of macroeconomic fundamentals and institutional quality in determining resilience during different monetary cycles.
The United States dollar continues to reign supreme. The dollar dominates international trade and financial transactions, and the foreign exchange reserves of central banks.
As such, US monetary policy still drives global financial cycles, impacting global capital flows and credit growth. Dollar dominance ultimately limits the policy choices of financially integrated emerging markets.
The rest of the blog is available on blogs.adb.org.
