Today’s Information is Ammunition for Tomorrow


By Luis M. Cubeddu and Camilo E. Tovar

(Version in Español)

Many Latin American economies are booming due to strong inflows of capital and stronger export earnings from high commodity prices. Though favorable today, this situation is also a double-edged sword.

Households, companies, and banks are spurred to take on financial risk. But, if risks become excessive or poorly managed, they sow the seeds of future problems. The region has experienced firsthand the boom and bust cycles that can ensue, and there is consensus that this needs to be avoided or minimized in the future. The IMF’s two latest Regional Economic Outlooks for the region—published in May and October 2010—focused on precisely this issue.

While the bottom line is the need for effective macroeconomic policy management and implementation, information is an essential ingredient. Continue reading

Reforming the Financial Landscape After the Crisis


Today we have released the three analytical chapters in our upcoming Global Financial Stability Report. These chapters cover some of the most relevant areas facing policymakers as they devise financial reforms that address the systemic risks that arose during the crisis and deal with potential forthcoming vulnerabilities.

Chapter 1 comes out next week. Chapter 2, published today,  focuses on two questions facing policymakers attempting to reform the financial landscape. One, whether systemic risk would be reduced by placing all regulatory functions under the purview of one entity—be that a single agency or an overseeing council? And two, if we were to use capital surcharges on financial institutions to try to limit the systemic risk associated with domino-like failures, how would we construct such surcharges?

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