Monetary and Financial Stability

” Clear that the pact does not represent a coordination of monetary policies and this was made clear the head of the Central Bank of Argentina (BCRA), Martin Redrado: “Speaking of coordination is still a word that does not qualify either meeting. I think there is a spirit of partnership, commitment to monetary and financial stability. ” This implied agreement reached between the Central Banks of the region, has implications of great value not only for regional macroeconomics but also for investors. First, the decision to avoid abrupt movements in exchange rates beyond help no adverse effect on the competitiveness of the economies of the region because they are not generating new inflationary pressures in those countries where exchange rate depreciated sharply, it is good for investors who are thus reduced the risk that the return measured in dollars, of its assets in these countries is not jeopardized by the movement of currency values. This agreement may also set a good precedent in the region and that central bankers have made it clear that sudden movements in exchange rates are negative for economies. Thus, foreign investors may have greater confidence that Latin American economies will seek to preserve the stability of exchange relations in the long term (which does not mean not to allow a devaluation, but it should not be sharp). Another important contribution derived from the agreement is that it contributes to the stability of financial systems in Latin America, beyond which each entity is able to achieve individually.

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