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Policy Instruments to Lean Against the Wind in Latin America

Author/Editor: G. Terrier | Rodrigo O. Valdés | Camilo Ernesto Tovar Mora | Jorge A. Chan-Lau | Carlos Fernandez Valdovinos | Mercedes Garcia-Escribano | Carlos I. Medeiros | Man-Keung Tang | Mercedes Vera-Martín | W. Christopher Walker
Authorized for Distribution: July 1, 2011
Electronic Access: Free Full Text (PDF file size is 1,854KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: 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.
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Series: Working Paper No. 11/159
Subject(s): Reserve requirements | Banking sector | Capital controls | Capital flows | Latin America | Risk management
Author's keyword(s): Capital Requirements | Dynamic Provisions | Leverage Ratios | Liquidity Requirements | Debt-to-Income Ratios | Loan-to-Value Ratios | Reserve Requirements | Foreign Exchange Credit Risk | Foreign Exchange Positions | Taxes on Capital Inflows
    Published:   July 1, 2011        
    ISBN/ISSN:   9781455297726/1018-5941   Format:   Paper
    Stock No:   WPIEA2011159   Pages:   113
    Price:   US$18.00
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