Capital Inflows to Latin America: The 1970s and 1990s

For the first time since the onset of the debt crisis in the slimmer or 1982, capital began to return to Latin America during 1990 and 1991.In general, Latin America's re-entry into the international capital markets was perceived as a positive development. However, policy-makers in the region have also voiced concern about the less favourable side-effects of these capital inflows. First, it was feared that the real exchange rate appreciation that of tell accompanies these inflows would adversely affect the international competitiveness of the export sector. Second, there was concern thatthe inflows could be reversed abruptly, possibly doing considerable damage to the domestic financial system in the process. The fear (If reversal was based on the experience of the debt crisis, which followed on the heels of the 'capital bonanza' of 1978-81. This chapter compares the recent capital inflows experience with that of the late 1970s. The analysis examines the differences and similarities between the two episodes over three broad areas:1. Domestic macroeconomic conditions in the recipient countries at the outset of both episodes. 2. The behaviour of the external factors that influence the international allocation of capital.3. The response of key macroeconomic variables, such as the real exchange rate, reserves, and stock prices to the inflow of capital

Populism and Central Bank Independence

The consensus that surrounded the granting of central bank independence in the pursuit of a price stability oriented monetary policy has been challenged in the aftermath of the global financial crisis, in the light of the rise of populism on the one hand and the expanded mandates of central banks on the other hand. After considering the economic case for independence and the three Ds (distributional, directional and duration effects), the paper examines three different dimensions in the debate of how the rise in populism - or simply general discontent with the status quo - affects central bank independence. Finally, the paper examines how to interpret the legality of central bank mandates, and whether or not central banks have exceeded their powers. This analysis leads us in turn to consider accountability and, in particular, the judicial review of central bank actions and decisions. It is important to have in place adequate mechanisms to "guard the guardians" of monetary and financial stability

Rethinking central banking: committee on international economic policy and reform

This report was written by The Committee on International Economic Policy and Reform, a non-partisan and non-ideological group of independent experts, comprised of academics and former government and central bank officials. The objective of the group is to analyze global monetary and financial problems, offer systematic analysis and advance reform ideas that would ordinarily not emerge from official processes.The Committee will identify areas in which the global economic architecture should be strengthened and work to develop solutions that attempt to reconcile national interests with broader global interests. It will attempt to offer useful suggestions to national policy makers and international financial institutions and foster public understanding of the key issues in global monetary management and economic governance. In this September 2011 report, the committee lays out a framework for rethinking central banking in light of lessons learned in the lead-up to and aftermath of the global financial crisis