As is evident in the right-hand chart, the relationship between the growth differential and capital inflows to EMEs seems to be quite strong. In particular, the rise in capital flows following the global financial crisis coincided with stronger relative growth performance in EMEs. And in 2011, capital inflows diminished along with the growth differential.
Even though handling procedures for credit claims are sometime more cumbersome, counterparties show an increasing interest for this asset class with very low opportunity cost. The bottom line of these figures is that the increasing use of lower opportunity cost collateral shows that a growing number of counterparties are becoming more active and efficient in managing their collateral, and thus their liquidity.