Policy Instruments to Lean Against the Wind in Latin America

• Author(s): Mr.G. Terrier, Mr.Rodrigo O. Valdes, Mr.Camilo Ernesto Tovar Mora, Mr.Jorge A. Chan-Lau, Carlos Fernandez Valdovinos, Ms.Mercedes Garcia-Escribano, Mr.Carlos I. Medeiros, Man-Keung Tang, MissMercedes Vera Martin, W. Christopher Walker,
• Publisher: International Monetary Fund
• Pages: 113
• ISBN_10: 1455297720
  ISBN_13: 9781455297726
  
• Language: en
• Categories: Business & Economics / Banks & Banking , Business & Economics / Money & Monetary Policy , Business & Economics / Industries / Financial Services ,

Description:... 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.