Policy Instruments To Lean Against The Wind In Latin America

International Monetary Fund

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Date Published 2011
Version IMF Working Paper 11/159
Primary Author Gilbert Terrier
Other Authors Rodrigo Valdés, Camilo E. Tovar, Jorge Chan- Lau, Carlos Fernández-Valdovinos, Mercedes García- Escribano, Carlos Medeiros, Man-Keung Tang, Mercedes Vera Martin, and Chris Walker
Theme Regulation and Supervision of Housing Finance Systems


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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