Magazine article Public Finance

Global Public Finances Face Years of Disruption

Magazine article Public Finance

Global Public Finances Face Years of Disruption

Article excerpt

Emerging market government fi nances are set to be thrown into cyclical disarray for years by two major causes of volatility, according to global economics expert Nenad Pacek.

Pacek, Global Success Advisors GmhB president and CEEMEA Business Group founder, said unchecked speculative buying and selling by the world's fi nancial institutions had huge implications for governments' accounts and their ability to access fi nance.

He told the CIPFA International Seminar that since the fi nancial crisis, institutions had started two "major parties" around the world to get the biggest returns. These were heavy investment in high-yield government bonds in emerging markets and commodity futures, both of which had caused signifi cant volatility.

The first was driven by quantitative easing in advanced economies. Financial institutions took newly printed money and poured it into emerging markets, infl ating currencies and providing easy access to fi nance for governments.

But, in 2013-14, when governments began to reconsider money printing, Pacek said "panic set in", triggering "mega mega outfl ows of capital from developing countries". …

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