Central Bank Involvement in Banking Crises in Latin America.
Title:
Central Bank Involvement in Banking Crises in Latin America.
Author:
Jácome, Luis Ignacio.
ISBN:
9781451992335
Personal Author:
Physical Description:
1 online resource (51 pages)
Series:
IMF Working Papers
Contents:
Contents -- I. Introduction -- II. Taking Stock of Banking Crises in Latin America -- A. Defining Banking Crises -- B. The Roots of the Crises -- C. Some Stylized Macroeconomic Facts Accompanying Banking Crises -- III. The Role of Central Banks in Banking Crises in Latin America -- A. Intensive Use of Central Bank Money -- B. The Role of the Institutional Framework -- IV. Macroeconomic Repercussions -- A. On Monetary Policy -- B. On Macroeconomic Stability -- V. Lessons and Concluding Remarks -- References -- Tables -- 1. Banking Crises in Latin America and Relevant Macro-Financial Features -- 2. Modalities of Monetization of Banking Crises -- 3. Institutional Framework behind Banking Crises in Latin America -- 4. Pair-Wise Correlations Between Selected Variables -- 5. Monetization of Banking Crises, Inflation, and Economic Growth -- Figures -- 1. Capital Flows and Banking Crises in Latin America -- 2. Financial Reform and Banking Crises in Latin America -- 3. Real Effective Exchange Rate and Banking Crises in Latin America -- 4. Banking Crises and Real Credit Growth -- 5. Large Banking Crises in Latin America-Selected Episodes -- 6. Minor and Moderate Banking Crises in Latin America-Selected Episodes -- 7. Performance of the Money Multiplier in the Midst of Banking Crises in Latin America -- 8. Banking Crises and Central Bank Money -- 9. Central Bank Money in Banking Crises and Currency Depreciation -- 10. Central Bank Money in Banking Crises and Fall in International Reserves -- Boxes -- 1. Large "Monetization" of Banking Crises in Selected Countries -- 2. Effective Episodes of Bank Restructuring and Resolution in Selected Countries -- 3. Banking Crises and Monetary Policy -- Appendix -- I. Sample of Episodes of Banking Crises in Latin America from 1990 to 2006-Stylized Facts and Policy Response.
Abstract:
This paper reviews the nature of central bank involvement in 26 episodes of financial disturbance and crises in Latin America from the mid-1990s onwards. It finds that, except in a handful of cases, large amounts of central bank money were used to cope with large and small crises alike. Pouring central bank money into the financial system generally derailed monetary policy, fueled further macroeconomic unrest, and contributed to simultaneous currency crises, thereby aggravating financial instability. In contrast, when central bank money issuance was restricted and bank resolution was timely executed, financial disturbances were handled with less economic cost. However, this strategy worked provided appropriate institutional arrangements were in place, which highlights the importance of building a suitable framework for preventing and managing banking crises.
Local Note:
Electronic reproduction. Ann Arbor, Michigan : ProQuest Ebook Central, 2017. Available via World Wide Web. Access may be limited to ProQuest Ebook Central affiliated libraries.
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