Graph Info:
Stops refer to sudden stops in capital flows,
usually followed by a sharp decrease
in output, private spending, and the real
exchange rate. All types of economies/
countries experienced stops, but a majority of the
loss of world GDP (output) came from OECD
(advanced) countries that were hit hardest.
This reflects the increased holdings by
advanced economies, specifically their
central banks, of debt securities. While
prior to the financial crisis many
countries held large debts already,
central banks took on more debt in order
to stabilize the world economy. This
includes the method of quantitative easing.
Swaps are meant to increase liquidity.
The swap indicator rises when swap
agreements between central banks are
made to help circulate money, mainly
dollars in this period. This rose mainly in
western countries, since they have closer
bank ties and were most in need of dollars
in order to stabilize their economies.
Capital inflows surged and then sharply
decreased in 2008 with the largest losses
in European countries like Luxembourg
(blue). These countries are heavily
integrated in global ginancial systems
and experienced worse effects because of
this. The drop is also a result of the sudden
decrease in confidence and demand in the market.
There was a large, sharp decrease in the IMF Draw to
GDP. The IMF Draw is an international reserve asset created
by the IMF to supplement member countries'
official reserves. In 2009, extra reserves
were allocated to provide liquidity to the
global economic system. The IMF Draw increased for mainly
'developing' countries reflecting the benefit of institutions for growing
economies that are less capable of mitigating economic crises domestially.
This refers to the is the percent of GDP that is
made up of currency reserves. This rose,
especially in Asian countries, edue to the
need for liquidity and stability. These countries
already had large reserves, which increased
further to promote financial integration.