Purpose This paper aims to discuss the money creation mechanisms in emerging markets with special focus on external transactions and outlines the implications for monetary policy and financial stability issues. Design/methodology/approach To make the argument, the authors analyze a historical...

We analyse the ability of credit gap measures to predict banking crises by estimating the usefulness measure conditionally on policymaker's preferences. The results show that the signals based on the credit gap indicators are most useful when the policymaker’s preferences regarding Type I and...