Javier Guzmán Calafell: Policy dialogue - global finance exploration

Remarks by Mr Javier Guzmán Calafell, Deputy Governor of the Bank of Mexico, at the "Policy Dialogue - Global Finance Exploration", during the International Finance Forum 2018 Annual Conference "New globalisation: a path to the future", Guangzhou, China, 24 November 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Let me start by expressing my appreciation to the organizers for the opportunity to participate in this 2018 edition of the IFF Annual Conference. Following a period of strong inflows in 2017 and early 2018, nonresident portfolio capital flows to emerging market economies (EMEs) started to reverse in late-April this year, with bond and equity fund withdrawals accumulating to date about US$28 billion. This has responded to a spike in risk aversion, reflected in a series of waves of uncertainty over the year in response to a combination of developments. The latter include upward-trending interest rates in the US, a surge in trade-related tensions, geopolitical developments, a deceleration of the Chinese economy, the decline in key stock markets, heightened political and policy uncertainty in a number of EMEs, as well as sharp declines in oil prices to levels not seen in about a year, among others. As a result, financial conditions in these economies have shown a significant tightening which, according to some estimates, is comparable to that experienced during the taper tantrum episode of 2013.