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Currency Mismatch in the Banking Sector in Latin America and the Caribbean

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  • Martin Tobal

    (Banco de México and CEMLA)

Abstract

Existing literature uses data based on the residence principle to proxy for currency mismatch. Nonetheless, these data are frequently not disaggregated by currency and cannot identify mismatches in the domestic market. This paper circumvents these issues by constructing a new data set on foreign currency assets and liabilities in the banking sector in Latin America and the Caribbean. The new data reveal a reduction in long foreign currency positions, with several countries taking short positions after 2006. Moreover, employing a methodology that accounts for time-varying unobservable characteristics, this reduction is shown to be partially explained by the implementation of prudential policies.

Suggested Citation

  • Martin Tobal, 2018. "Currency Mismatch in the Banking Sector in Latin America and the Caribbean," International Journal of Central Banking, International Journal of Central Banking, vol. 14(1), pages 317-364, January.
    • Handle: RePEc:ijc:ijcjou:y:2018:q:0:a:8
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    7. García-Cicco, Javier, 2022. "Alternative monetary-policy instruments and limited credibility: An exploration," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(1).
    8. Bitar, Joseph, 2021. "Foreign Currency Intermediation: Systemic Risk and Macroprudential Regulation," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(2).
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    11. Hari Venkatesh & Gourishankar S Hiremath, 2020. "Currency Mismatches In Emerging Market Economies: Is Winter Coming?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(1), pages 25-54.

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    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F30 - International Economics - - International Finance - - - General

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