1. IMF (2010a).
  2. IMF (2010a).
  3. IMF (2010a).
  4. OECD Going for Growth 2010 notes that OECD countries must expect a reduction of 0.5 percentage points in potential growth for reasons unrelated to the crisis, in particular the slower growth in potential employment stemming from their ageing populations (OECD, 2010).
  5. EMBI spreads are the interest rate premia of a country’s public bonds relative to interest of US treasury bonds.
  6. Domestic liabilities include foreign direct investment into the country, portfolio liabilities, credit in the capital account and “other liabilities” as classified by the IFS. This measure is only part of the more traditional measure of net capital inflows, as it does not include the purchase (or sale) of foreign assets by domestic agents. Although increasingly important, the latter purchases are part of the response rather than the external shock faced by each country.
  7. More specifically, the “Policy Resilience Index” is the sum of the “Monetary Resilience Index” and the “Fiscal Resilience Index” discussed in the previous LEO.
  8. The semi-elasticity is the increase in the tax/GDP ratio of four different sources of revenues when faced with an increase of 1 percentage point in the output gap.
  9. Structural balances are defined as fiscal balances after adjusting for the cyclical effects of automatic stabilisers and, in Argentina, Chile, Mexico and Peru, the cyclical effects of fiscal revenues derived from commodity exports. These balances are illustrated as a ratio to potential GDP.
  10. See Borensztein et al.(2008) for an analysis of the development of bond markets in the region.
  11. One might cite any of the crises in the 1980s and more recently (in alphabetical order) Argentina in 2001, Bolivia in 1999, Colombia in 1999, Dominican Republic in 2003, Ecuador in 1998, Peru in 1999, and Uruguay in 2002. Moreover, external crises, such as Asia in 1997 and Russia in 1998, have provoked instability in Latin American financial systems. Such crises are characterised as long, deep and costly for the public sector (Reinhart and Rogoff, 2010).
  12. Last year’s Outlook (OECD, 2009a) looked at this in detail.
  13. See Amato and Furfine (2003).
  14. Glen de Tobón (2008).
  15. The average of non-performing loans to total loans in 2009 for Asian, and Central and Eastern European emerging countries is close to 4.7% and 11.2% respectively (IMF, 2010b).
  16. The Latin American average of bank provisions to non-performing loans is 165% in 2009, well above the Asian (108%) and Central and Eastern European (75%) averages for the same year (IMF, 2010b).
  17. For an analysis of the main risks to corporate and household balance sheets see local financial stability reports (Banco Central do Brasil, 2010; Banco Central de Reserva del Perú, 2010; Banco Central del Uruguay, 2009; Banco Central de la República de Argentina, 2010; Banco de la República de Colombia, 2010; Banco Central de Chile, 2010).
  18. Several indicators are used to measure the liquidity of a bank. See Banco Central do Brasil (2010), Banco Central de la República de Argentina (2010), Banco de la República de Colombia (2010) for descriptions of these.
  19. For instance, capital requirements in Argentina, Brazil, Colombia, Peru and Venezuela are above the 8% established by the Bank of International Settlements.
  20. However, most of this recent good performance in capital ratios is explained by a decrease in total assets rather than an increase in capital (see Izquierdo and Talvi, 2010, for an analysis showing the reduction in credit growth in the region in 2009). See IMF (2010b) for data on regulatory-capital ratios in emerging countries.
  21. To give just one example, in Uruguay it costs 16.1% to borrow in local currency and just 6.1% in some foreign currencies (see Banco Central del Uruguay, 2009).
  22. See statistical annex Figure 0.A1 for the commercial, consumption and mortgage loans made in foreign and domestic currency, for a sample of Latin American countries exposed to currency risk.
  23. Figure 0.A2 in the statistical annex shows the ratio of loans to GDP broken down into consumption, mortgage and commercial components. Loan-to-GDP ratios lie below 50% for Latin American economies with the exception of Chile. On average, domestic credit to the private sector is close to 35% of GDP, contrasting with the levels seen in high-income countries (155%), East Asian and Pacific countries (100%) and even with middle-income countries as a whole (63%). (Data following Beck et al., 2000 updated to 2008). See also Honohan (2006) and FELABAN (2007).


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Amato, J.D. y C. Furfine (2003), "Are Credit Ratings Procyclical?", documento de trabajo, Working Paper 129, febrero, Banco de Pagos Internacionales, Basilea.

Banco Central de Chile (2010), Informe de Estabilidad Financiera, primer semestre.

Banco Central de la República de Argentina (2010), Boletín de Estabilidad Financiera, primer semestre, Buenos Aires.

Banco Central de Reserva del Perú (2010), Reporte de Estabilidad Financiera, mayo, Lima.

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Honohan, P. (2006), "Household Financial Assets in the Process of Development", documento de trabajo, Policy Research Working Paper 3965, Banco Mundial, Washington, DC.

Izquierdo, A. y E. Talvi (2010), The Aftermath of the Crisis: Policy Lessons and Challenges Ahead for Latin America and the Caribbean, Banco Interamericano de Desarrollo, Nueva York, NY.

Mello, L. de y D. Moccero (2006), "Brazil Fiscal Stance During 1995-2005: The effect of indebtedness on fiscal policy over the business cycle", documento de trabajo, OECD Economic Department Working Papers 485, OCDE, París.