Toward an Effective Supervision of Partially Dollarized Banking Systems
AbstractThe paper presents a supervisory framework that addresses the vulnerabilities of partially dollarized banking systems. The tendency to underprice systemic liquidity risk and currency-induced credit risk creates vulnerabilities that need supervisory responses. The framework seeks to induce agents to better internalize risks by implementing a risk based approach to supervision, following the risk management guidelines of the Basel Committee, and by establishing buffers to cover higher liquidity and solvency risks. The paper also shows that most dollarized countries have addressed their liquidity vulnerabilities, but few have addressed those arising from currency-induced credit risks.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 06/32.
Date of creation: 01 Jan 2006
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-05 (All new papers)
- NEP-FMK-2006-03-05 (Financial Markets)
- NEP-IFN-2006-03-05 (International Finance)
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