Missing Dollars: Significant Statistical Omissions of Global Monetary Aggregates*

Jin Zhongxia  and Guo Kai
Financial Research Institute, the People’s Bank of China, Beijing, China

Abstract: The choice of liquidity indicators is a key issue in global liquidity management. Money supply statistics such as M2 are no longer able to reflect the true scale of global liquidity due to the effect of financial globalization. External bank liabilities, as an important indicator to measure global liquidity conditions, are omitted by many countries in their broad money statistics. Given that financial institutions’ external liabilities serve as a major source of fiscal shock as well as an important cause for the accumulation of monetary risk, it is imperative to include these external liabilities into the global liquidity indicator system.
Key words: global liquidity, global monetary aggregate, broad money, external bank liabilities

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