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Limits to Foreign Exchange Net Open Positions and Capital Requirements in Emerging Economies

Author

Listed:
  • Marc Hofstetter
  • Jose Ignacio Lopez
  • Miguel Urrutia
Abstract
Many emerging economies have regulatory limits on foreign exchange rates net open positions of banks. We show that such limits leave the capital adequacy ratios of banks with investments in foreign subsidiaries more exposed to exchange rate fluctuations. We discuss alternative policies for overcoming this trade-off.

Suggested Citation

  • Marc Hofstetter & Jose Ignacio Lopez & Miguel Urrutia, 2018. "Limits to Foreign Exchange Net Open Positions and Capital Requirements in Emerging Economies," Documentos CEDE 15995, Universidad de los Andes, Facultad de Economía, CEDE.
    • Handle: RePEc:col:000089:015995
    as

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    File URL: https://repositorio.uniandes.edu.co/bitstream/handle/1992/8849/dcede2018-10.pdf
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    References listed on IDEAS

    as
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    8. Gabriele Galati & Richhild Moessner, 2013. "Macroprudential Policy – A Literature Review," Journal of Economic Surveys, Wiley Blackwell, vol. 27(5), pages 846-878, December.
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    Cited by:

    1. Ledhem, Mohammed Ayoub & Mekidiche, Mohammed, 2020. "Economic growth and financial performance of Islamic banks: a CAMELS approach," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 28, pages 47-62.
    2. Cesa-Bianchi, Ambrogio & Kumhof, Michael & Sokol, Andrej & Thwaites, Gregory, 2019. "Towards a new monetary theory of exchange rate determination," Bank of England working papers 817, Bank of England.
    3. Ahmed Mehedi Nizam, 2023. "An analysis of transnational transfer of wealth through cross-border financial transactions," SN Business & Economics, Springer, vol. 3(1), pages 1-31, January.
    4. Nizam, Ahmed Mehedi, 2021. "Redistribution of wealth through cross border financial transactions: A closer look," MPRA Paper 109374, University Library of Munich, Germany.

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    More about this item

    Keywords

    Foreign Exchange Open Positions; Capital Requirements;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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