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Policy Instruments to Lean Against the Wind in Latin America

  • 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

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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Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/159.

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Length: 113
Date of creation: 01 Jul 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/159
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