Lenain was speaking during an e-symposium hosted by Abu Dhabi-based TRENDS Research & Advisory on the risks and opportunities of using unconventional financial tools like excess liquidity amid the COVID-19 coronavirus pandemic.
Lenain said that massive monetary injections also require central bank independence and credibility, which is not always the case in emerging markets.
“The big concern with liquidity injection is that it would lead to a depreciation of the currency, higher inflation, financial stability risks, and foreign exchange mismatches,” Lenain said.
The OECD pointed to examples of massive currency depreciation in countries like Brazil, South Africa, Argentina, Turkey, Mexico, and Russia following the outbreak of the COVID-19 pandemic.