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Latin American Central Bank Reform: Progress and Challenges

Author

Listed:
  • Agustin Carstens

    (International Monetary Fund)

  • Luis I. Jacome H.

    (International Monetary Fund)

Abstract

This study takes stock of the institutional reform of monetary policy in Latin America since the early 1990s. It argues that strengthening the legal independence of central banks, together with macroeconomic policies, was instrumental in reducing inflation from three-digit annual rates in the 1990s to single-digit territory in 2004. The paper also discusses the main challenges of monetary policy today, namely, achieving price stability, restoring market confidence in domestic currencies, and sticking to policy consistency despite adverse effects of the volatility of capital flows. Finally, recurrent banking crises and lack of fiscal discipline are identified as the main risks for the success of monetary policy in Latin America.

Suggested Citation

  • Agustin Carstens & Luis I. Jacome H., 2005. "Latin American Central Bank Reform: Progress and Challenges," Macroeconomics 0509022, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0509022
    Note: Type of Document - pdf; pages: 44
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0509/0509022.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Central banks independence; monetary policy; inflation; Latin America;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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