Modernizing Bank Regulation in Support of Financial Deepening: The Case of Uruguay
29 Pages Posted: 13 Oct 2009
Date Written: September 2009
This paper studies how Uruguay's regulatory framework was gradually strengthened to address shortcomings identified during the 2002-03 crisis, to align with international standards and, more recently, to deal with cyclical pressures resulting in an acceleration of bank lending. In particular, regulatory reforms pertaining to loan classification and provisioning as well as liquidity requirements are reviewed and evaluated against best practices. The paper concludes that prudential regulation in Uruguay now generally conforms to high standards while also embracing innovative elements such as dynamic provisioning.
Keywords: Bank reforms, Bank regulations, Bank supervision, Banking sector, Basel Core Principles, Business cycles, Credit expansion, Credit risk, Financial crisis, Financial soundness indicators, Liquidity management, Loans, Risk management, Uruguay
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