The Use of Reserve Requirements as a Policy Instrument in Latin America

13 Pages Posted: 27 Aug 2012

See all articles by Carlos Montoro

Carlos Montoro

Central Reserve Bank of Peru

Ramon Moreno

Self employed

Date Written: March 2011

Abstract

In recent years, some central banks in Latin America and other emerging market regions have used reserve requirements to pursue monetary or financial stability goals. In the past decade, they have raised reserve requirements in the expansion phase of the cycle to tighten monetary conditions without attracting capital inflows. After the bankruptcy of Lehman Brothers, they lowered them sharply, helping to restore market functioning. In some cases, the use of reserve requirements can complement the policy rate in the conduct of monetary policy. However, there are trade-offs in the use of this instrument.

JEL Classification: E51, E52, E43

Suggested Citation

Montoro, Carlos and Moreno, Ramon, The Use of Reserve Requirements as a Policy Instrument in Latin America (March 2011). BIS Quarterly Review, March 2011, Available at SSRN: https://ssrn.com/abstract=1785268

Carlos Montoro (Contact Author)

Central Reserve Bank of Peru ( email )

Jirón Miroquesada 441
Lima, Lima 1
Peru

Ramon Moreno

Self employed ( email )

Basel
Switzerland

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