Posted

July 12, 2011 02:48:46 AM

Date

2011-07

Author

Gilbert Terrier, Rodrigo Valdés, Camilo E. Tovar, Jorge ChanLau, Carlos Fernández-Valdovinos, Mercedes GarcíaEscribano, Carlos Medeiros, Man-Keung Tang, Mercedes Vera Martin, and Chris Walker

Affiliation

WHD, IMF

Title

Policy Instruments To Lean Against The Wind In Latin America

Summary /
Abstract

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.

Keywords

Capital Requirements, Dynamic Provisions, Leverage Ratios, Liquidity Requirements, Debt-to-Income Ratios, Loan-to-Value Ratios, Reserve Requirements, Foreign Exchange Credit Risk, Foreign Exchange Positions, Taxes on Capital Inflows

URL

http://www.imf.org/external/pubs/ft/wp/2011/wp11159.pdf

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