Illya Gerasymchuk
Financial & Software Engineer
so a weaker US dollar tends to increase global USD liquidity
so a weaker US dollar tends to increase global USD liquidity
in the SVAR, one standard deviation of US dollar's appreciation leads to a fall in cross-border USD lending. it reaches its bottom after 6 months and then eventually recovers after 2.5 years if no new shocks arrive
bank's leverage ratios improve due to collateral appreciation, thus allowing them to borrow more USD
collateral here is the non-USD local currency, such as Yuan