Toward An Effective Supervision of Partially Dollarized Banking Systems
The 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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References listed on IDEAS
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- Alain Ize & Miguel Kiguel & Eduardo Levy Yeyati, 2005. "Managing Systemic Liquidity Risk in Financially Dollarized Economy," Business School Working Papers managsystrisk, Universidad Torcuato Di Tella.
- Cem Karacadag & Paul J. Heytens, 2001. "An Attempt to Profile the Finances of Chinaâ€™s Enterprise Sector," IMF Working Papers 01/182, International Monetary Fund.
- Reinhart, Carmen & Calvo, Guillermo, 2002.
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CEMA Working Papers
594, China Economics and Management Academy, Central University of Finance and Economics.
- Morris Goldstein & Philip Turner, 2004. "Controlling Currency Mismatches in Emerging Markets," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 373.
- De Nicolo, Gianni & Honohan, Patrick & Ize, Alain, 2003.
"Dollarization of the banking system : good or bad?,"
Policy Research Working Paper Series
3116, The World Bank.
- repec:rus:hseeco:123906 is not listed on IDEAS
- Alain Ize & Andrew Powell, 2005.
"Prudential Responses to de facto Dollarization,"
Journal of Economic Policy Reform,
Taylor & Francis Journals, vol. 8(4), pages 241-262.
- Alain Ize & Andrew Powell, 2003. "Prudential Responses to De Facto Dollarization," Business School Working Papers defactodollarization, Universidad Torcuato Di Tella.
- Alain Ize & Andrew Powell, 2004. "Prudential Responses to De Facto Dollarization," IMF Working Papers 04/66, International Monetary Fund.
- Aaron Tornell & Frank Westermann (ed.), 2005.
"Boom-Bust Cycles and Financial Liberalization,"
MIT Press Books,
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edition 1, volume 1, number 9780262201599, June.
- Anne Marie Gulde & David S. Hoelscher & Alain Ize & David Marston & Gianni De NicolÃ³, 2004. "Financial Stability in Dollarized Economies," IMF Occasional Papers 230, International Monetary Fund.
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