Policy Instruments to Lean Against the Wind in Latin America
July 1, 2011
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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.
Subject: Balance of payments, Banking, Capital inflows, Financial institutions, Foreign exchange, Loans, Monetary policy, Mortgages, Reserve requirements
Keywords: bank, Capital inflows, Central America, credit risk, DTI limit, Eastern Europe, Europe, FX credit risks, FX exposure, FX lending, FX risk, Global, Loans, Mortgages, North America, rate, Reserve requirements, RR, RR regulation, WP
Pages:
113
Volume:
2011
DOI:
Issue:
159
Series:
Working Paper No. 2011/159
Stock No:
WPIEA2011159
ISBN:
9781455297726
ISSN:
1018-5941
