Presentations
The New Approach to Financial Regulation: Is It Relevant for Developing Countries? (With Applications to Latin America) (Presentation)
3/8/11
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These slides are from a presentation by Liliana Rojas-Suarez on the macroprudential approach to financial regulation.
Several key components of this approach include the recent Basel III Accord, which, if adopted by national governments, would mean higher capital requirements and entail a tighter focus on what constitutes "high-quality" capital. Other parts of the macroprudential approach covered in the slides include the dynamic provisioning of loans and an emphasis on assets that are sufficiently liquid during times of financial distress, such as "claims on or guaranteed by the IMF, BIS and other multilateral organizations."
The main aim of the macroprudential approach is to limit credit crunches by focusing on the financial system as a whole, not just on the health of individual financial institutions. However, as the slides note, several countries in Latin America already have high capital requirements, and some have also moved forward in implementing several other key components of the macroprudential approach.
