Can Emerging Market Central Banks Bail Out Banks? A+L4848 Cautionary Tale From Latin America
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Summary:
This paper investigates whether developing and emerging market countries can implement monetary policies similar to those used by advanced countries during the recent global crisis - injecting significant amounts of money into the financial system without facing major short-run adverse macroeconomic repercussions. Using panel data techniques, the paper analyzes episodes of financial turmoil in 16 Latin America during 1995-2007. The results show that developing and emerging market countries should be cautious because injecting money on a large scale into the financial system may fuel further macroeconomic instability, increasing the chances of simultaneous currency crises.
Series:
Working Paper No. 2011/258
Subject:
Banking Banking crises Currencies Exchange rates Financial crises Foreign exchange Monetary base Money
English
Publication Date:
November 1, 2011
ISBN/ISSN:
9781463923976/1018-5941
Stock No:
WPIEA2011258
Pages:
30
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