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Moodys Investors Service has said in a new report that while the quantitative easing (QE) programmes launched by the central banks in the emerging markets are largely positive, the risks involved vary widely because of differing macroeconomic fundamentals.

In the report, Moody's analysed 11 emerging markets where the central banks have embarked on the largest QE programmes -- India, Chile, Colombia, Croatia, Ghana, Hungary, Indonesia, the Philippines, Poland, South Africa and Turkey.

"Improved policy frameworks and institutional arrangements have supported the success of central banks' QE programmes. In most markets, QE launched at the height of the Covid-19 pandemic has helped offset the effect of capital outflows and brought down long-term bond yields as governments' financing needs increased," said Deborah Tan, Assistant Vice President and Analyst at Moody's.

But differences in institutional frameworks and macro fundamentals will lead to varying risks across economies. For instance, extending the QE when an economic recovery is already underway would make it more difficult to roll back, but prematurely withdrawing QE could tighten financial conditions and jeopardise a nascent recovery.

If central banks struggle to unwind QE, inflation could accelerate and debt-servicing costs, which vary across the 11 economies under review, could increase.

Credible exit plans will hinge on institutional frameworks' strength, with emerging markets with stronger frameworks facing less risk of maintaining and extending QE beyond what the economic conditions warrant, the report said.