Latin American Central Bank Reform: Progress and Challenges

Agustin Carstens and Luis Jácome
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Agustin Carstens: International Monetary Fund

Macroeconomics from University Library of Munich, Germany

Abstract: This study takes stock of the institutional reform of monetary policy in Latin America since the early 1990s. It argues that strengthening the legal independence of central banks, together with macroeconomic policies, was instrumental in reducing inflation from three-digit annual rates in the 1990s to single-digit territory in 2004. The paper also discusses the main challenges of monetary policy today, namely, achieving price stability, restoring market confidence in domestic currencies, and sticking to policy consistency despite adverse effects of the volatility of capital flows. Finally, recurrent banking crises and lack of fiscal discipline are identified as the main risks for the success of monetary policy in Latin America.

Keywords: Central banks independence; monetary policy; inflation; Latin America (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2005-09-15
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-mac and nep-mon
Note: Type of Document - pdf; pages: 44
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0509022

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