Macroprudential Regulations in Andean Countries - Working Paper 319

Abstract

Together with a handful of countries at the global level, a number of economies in the Andean region stand out by their innovative and rapid advances in the design and implementation of macroprudential financial regulations, that is, regulations that take into account financial risks generated at the systemic level. This paper focuses on three regulatory tools utilized in the region: countercyclical capital requirements, countercyclical loan-loss provisioning requirements, and liquidity requirements. In each case, the specifics of the policy instrument is described and compared across countries. Among the Andean countries, Colombia and Peru have been the most active in terms of implementation of countercyclical macroprudential regulations.