Analysing the Integration of Brazilian Financial Markets

Description

Research by Dr Annina Kaltenbrunner, Associate Professor in the Economics of Globalisation and the International Economy, and Dr Bianca Orsi, Teaching Fellow in Economics, analyses the risks and opportunities of emerging market economy currency internationalisation with a particular focus on Brazil.

The process of currency internationalisation is a significant challenge for emerging markets and presents a number of risks, such as heightened external vulnerability, exchange rate volatility and potential loss of macroeconomic policy autonomy. Kaltenbrunner, along with collaborators at the University of Liverpool and the University of Applied Sciences Vienna, were contracted to undertake research and advise the Brazilian Central Bank (BCB) on the costs and benefits of different types of emerging market financial integration and currency internationalisation.

The researchers recommended a managed process of currency internationalisation for Brazil and put forward a strategy of trade-related currency regionalisation. This strategy has informed the BCB’s negotiations with its regional neighbours, in particular with regard to monetary and financial issues, and assisted the development of the SML (Local Currency Payment System) which supports regional trade in particular that of Small and Medium Sized Enterprises. 

Outputs:

• Report - Analyzing the Integration of Brazilian Financial Markets
• Report – Research and policy report on SML barriers
• Podcast – What is currency internationalization and why does it matter?
• Blog post - Currency internationalisation: Opportunities and risks in emerging markets

Related project:

• The financialisation of nonfinancial corporations: a comparison between Brazil and Turkey using sectoral data

Related academic articles:

• Bonizzi, B.; Kaltenbrunner, A. (2019). Liability Driven Investment and Pension Fund Exposure to Emerging Markets: A Minskyan Analysis. Environment and Planning A: Economy and Space, 51(2), pp. 420-439
• Kaltenbrunner, A.; Painceira, J.P. (2018) Subordinated Financial Integration and Financialisation in Emerging Capitalist Economies: The Brazilian Experience. New Political Economy, 23 (3), pp. 290-313
• Kaltenbrunner, A (2018) Financialised Internationalisation and Structural Hierarchies: A mixed-method Study of Exchange Rate Determination in Developing Countries. The Cambridge Journal of Economics, 42(5), pp. 1315-1341
• Bortz, Pablo G; Kaltenbrunner, A. (2018) The International Dimension of Financialization in Developing and Emerging Economies. Development and Change, 49, Forum 2018, pp. 375-393
• Kaltenbrunner, A.; Painceira, J.P. (2017) The Impossible Trinity: Inflation Targeting, Exchange Rate Management and Open Capital Accounts in Emerging Economies. Development and Change, 48(3), pp. 452-48
• Kaltenbrunner, A. (2015) A Post Keynesian Framework of Exchange Rate Determination: A Minskyan Approach. The Journal of Post Keynesian Economics, 38(3), pp. 426-448
• Kaltenbrunner, A.; Painceira, J.P. (2015) Developing Countries’ changing Nature of Financial Integration and New Forms of External Vulnerability: The Brazilian Experience. The Cambridge Journal of Economics, 39(5), pp. 1281-1306.
• Kaltenbrunner, A. (2015) Financial Integration and Exchange Rate Determination: A Brazilian Case Study.  International Review of Applied Economics, 29(2), pp. 129-149
• Kaltenbrunner, A. (2010) International Financialization and Depreciation: The Brazilian Real in the          International Financial Crisis. Competition and Change, 13 (3-4), September-December 2010, pp. 294-321.