Policy Instruments to Lean Against the Wind in Latin America

G. Terrier, Rodrigo Valdés, Camilo Tovar (), Jorge Chan-Lau, Carlos Fernandez Valdovinos, Mercedes Garcia-Escribano, Carlos Medeiros, Man-Keung Tang, Mercedes Vera Martin and W. Christopher Walker

No 2011/159, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews policy tools that have been used and/or are available for policy makers in the region to lean against the wind and review relevant country experiences using them. The instruments examined include: (i) capital requirements, dynamic provisioning, and leverage ratios; (ii) liquidity requirements; (iii) debt-to-income ratios; (iv) loan-to-value ratios; (v) reserve requirements on bank liabilities (deposits and nondeposits); (vi) instruments to manage and limit systemic foreign exchange risk; and, finally, (vii) reserve requirements or taxes on capital inflows. Although the instruments analyzed are mainly microprudential in nature, appropriately calibrated over the financial cycle they may serve for macroprudential purposes.

Keywords: WP; bank; RR; credit risk; rate; FX credit risks; DTI limit; FX lending; RR regulation; FX exposure; FX risk; Reserve requirements; Loans; Capital inflows; Mortgages; Global; Europe; Eastern Europe; North America; Central America (search for similar items in EconPapers)
Pages: 113
Date: 2011-07-01
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Citations: View citations in EconPapers (52)

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