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Currency Mismatch in the Banking Sector in Latin America and the Caribbean

Author

Listed:
  • Martin Tobal

    (Banco de México and CEMLA)

Abstract

Existing literature uses data based on the residence principle to proxy for currency mismatch. Nonetheless, these data are frequently not disaggregated by currency and cannot identify mismatches in the domestic market. This paper circumvents these issues by constructing a new data set on foreign currency assets and liabilities in the banking sector in Latin America and the Caribbean. The new data reveal a reduction in long foreign currency positions, with several countries taking short positions after 2006. Moreover, employing a methodology that accounts for time-varying unobservable characteristics, this reduction is shown to be partially explained by the implementation of prudential policies.

Suggested Citation

  • Martin Tobal, 2018. "Currency Mismatch in the Banking Sector in Latin America and the Caribbean," International Journal of Central Banking, International Journal of Central Banking, vol. 14(1), pages 317-364, January.
    • Handle: RePEc:ijc:ijcjou:y:2018:q:0:a:8
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    Cited by:

    1. García-Cicco, Javier, 2022. "Alternative monetary-policy instruments and limited credibility: An exploration," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 3(1).
    2. Schelling, Tan & Towbin, Pascal, 2022. "What lies beneath—Negative interest rates and bank lending," Journal of Financial Intermediation, Elsevier, vol. 51(C).
    3. Shesadri Banerjee & M S Mohanty, 2021. "US monetary policy and the financial channel of the exchange rate: evidence from India," BIS Working Papers 945, Bank for International Settlements.
    4. Hale, Galina & Juvenal, Luciana, 2023. "External Balance Sheets and the COVID-19 Crisis," Santa Cruz Department of Economics, Working Paper Series qt00p8f01t, Department of Economics, UC Santa Cruz.
    5. Hale, Galina & Juvenal, Luciana, 2023. "External Balance Sheets and the COVID-19 Crisis," Journal of Banking & Finance, Elsevier, vol. 147(C).
    6. Bitar, Joseph, 2021. "Foreign Currency Intermediation: Systemic Risk and Macroprudential Regulation," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 2(2).
    7. María Alejandra Amado, 2022. "Macroprudential FX Regulations: Sacrificing Small Firms for Stability?," Working Papers 2236, Banco de España.
    8. Hale, Galina & Juvenal, Luciana, 2023. "External Balance Sheets and the COVID-19 Crisis," Journal of Banking & Finance, Elsevier, vol. 147(C).
    9. Hari Venkatesh & Gourishankar S Hiremath, 2020. "Currency Mismatches In Emerging Market Economies: Is Winter Coming?," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(1), pages 25-54, April.
    10. Scott Regifère MOUANDAT, 2022. "Asymétrie des Monnaies : Quel Effet sur la Dette Publique des pays membres de la CEMAC ?," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 13(1), pages 62-83, June.

    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F30 - International Economics - - International Finance - - - General

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