05594oam 22007815 450 991079104550332120200520144314.01-4648-0213-010.1596/1813-9450-6793(CKB)2550000001275464(EBL)1678760(SSID)ssj0001212775(PQKBManifestationID)11659106(PQKBTitleCode)TC0001212775(PQKBWorkID)11210842(PQKB)10882696(Au-PeEL)EBL1678760(CaPaEBR)ebr10856314(CaONFJC)MIL597480(OCoLC)878148186(US-djbf)18217094(The World Bank)6793(MiAaPQ)EBC1678760(US-djbf)6793(EXLCZ)99255000000127546420020129d2014 uf 0engurcn|||||||||txtrdacontentcrdamediacrrdacarrierReserve Requirements in the Brave New Macroprudential World /Cordella, TitoWashington, D.C.,The World Bank,20141 online resource (48 pages)A World Bank StudyDescription based upon print version of record.1-4648-0212-2 1-306-66229-X Includes bibliographical references at the end of each chapters.Front Cover; Contents; Preface; Acknowledgments; About the Authors; Abbreviations; Executive Summary; Chapter 1 Introduction; Chapter 2 Stylized Facts; Which Countries Have Used Reserve Requirements as a Macroeconomic Stabilization Tool?; Figures; Figure 2.1 Frequency of Changes in Reserve Requirements (1970-2011); What Have Been the Cyclical Properties of RR as a Macroeconomic Stabilization Tool?; Figure 2.2 Active versus Passive Reserve Requirement Policy (1970-2011); Figure 2.3 Frequency of Changes in Reserve Requirements (2005-11)Figure 2.4 Cyclicality of Reserve Requirement Policy (1970-2011)Figure 2.5a Cyclicality of Reserve Requirement Policy (1970-2004); Figure 2.5b Cyclicality of Reserve Requirement Policy (2005-11); How Is RRP Related to the Credit Cycle?; Figure 2.6 Correlation of Private Credit with GDP (1970-2011); What Is the Relation between RRP and Monetary Policy?; Figure 2.7 Private Credit for Developing Countries (1970-2011); Figure 2.8 Cyclicality of RRP versus Private Credit (Active Countries, 1970-2011); Figure 2.9 Cyclicality of Interest Rate Policy (1970-2011)Figure 2.10a Cyclicality of Interest Rate Policy (1970-2004) Figure 2.10b Cyclicality of Interest Rate Policy (2005-11); Tables; Table 2.1 Policy Mix Matrix (1970-2011); How Does Foreign Exchange Market Intervention Fit into the Picture?; Table 2.2a Policy Mix Matrix (1970-2004); Table 2.2b Policy Mix Matrix (2005-11); Figure 2.11 Cyclicality of International Reserves (1970-2011); Figure 2.12 Monetary versus Foreign Exchange Market Intervention Policy (1970-2011); Figure 2.13 RRP versus Foreign Exchange Market Intervention (1970-2011)Chapter 3 An Illustration of Policy Responses for Four Latin American Countries Figure 3.1 Policy Response to a Real GDP Shock (One Standard-Deviation Shock); Figure 3.2 Policy Response to a Nominal Exchange Rate Depreciation Shock; Boxes; Box 3.1 The Narrative Approach to Identification; Chapter 4 Policy Rationale; The Need for a Second Instrument; Figure 4.1 Cyclicality of Nominal Exchange Rates (1970-2011); Why Do RR Often Serve as the Second Instrument?; Figure 4.2 Monetary versus "Currency Defense" Policy (1970-2011); Which Country Characteristics Explain Different Policy Mixes?Figure 4.3 Relative Effect of Reserve Requirement versus Monetary Policy Table 4.1 Currency Crises and Policy Mix; Table 4.2 Credit and Policy Mix; Table 4.3 Capital Account Openness and Policy Mix; Chapter 5 Microprudential Effects of Business Cycle Management; Box 5.1 Macroprudential Policy in Emerging Markets: The Cases of Brazil and Turkey; Tradeoffs over the Business Cycle; Chapter 6Policy Tensions and Tradeoffs; Chapter 7Policy Conclusions; Bibliography; Back CoverUsing a new, large data set on quarterly reserve requirements for the period 1970-2011, this paper provides new evidence on the use of reserve requirements as a countercyclical macroprudential tool in developing countries. The appeal of reserve requirements lies in the pro-cyclical behavior of the exchange rate over the business cycle in developing countries. This enormously complicates the use of interest rates as a countercyclical instrument (because of its effect on the exchange rate) and calls for a second instrument. The paper suggests that conflicts may arise between the microprudential and macroprudential policy stances.Policy research working papers.World Bank e-Library.Money supplyMonetary policyCapital movementsForeign exchange ratesBusiness cyclesMoney supply.Monetary policy.Capital movements.Foreign exchange rates.Business cycles.332.414Cordella Tito124211Cordella TitoGeller Michael S.Park Ji WonDJBFDJBFBOOK9910791045503321Reserve Requirements in the Brave New Macroprudential World3804511UNINA