The BIS and the Latin American Debt Crisis of the 1980s

National Bank of Belgium Working Paper No. 247

34 Pages Posted: 11 Dec 2013

See all articles by Piet Clement

Piet Clement

Bank for International Settlements (BIS)

Ivo Maes

National Bank of Belgium

Date Written: December 2013

Abstract

The Latin American debt crisis, which broke out in August 1982, was the first global financial crisis in the postwar period. While the crisis started in the "periphery", it constituted a threat to the "core" of the world economy, as the banking system was under severe pressure. Alongside the IMF, the BIS played an important role in coordinating the international response to the crisis. Moreover, a lot of work at the BIS in the second half of the 1970s had aimed at restraining the debt build-up. Discussions on the rising debt levels were highly influential in shaping the BIS view of financial stability, with the "macroprudential" concept at its core. However, in the analysis of the debt buildup, the role of financial innovations was not really captured. In this paper, we focus on the Latin American debt crisis, discussing first the debt build-up, different initiatives to restrain lending and the BIS role in the management of the crisis. We then turn to the ensuing efforts to strengthen the financial system and the emerging BIS approach to financial stability.

Keywords: Latin American debt crisis, BIS, macroprudential, financial fragility, Lamfalussy

JEL Classification: A11, B22, B32, E3, F02, G10, N10

Suggested Citation

Clement, Piet and Maes, Ivo, The BIS and the Latin American Debt Crisis of the 1980s (December 2013). National Bank of Belgium Working Paper No. 247. Available at SSRN: https://ssrn.com/abstract=2365792 or http://dx.doi.org/10.2139/ssrn.2365792

Piet Clement (Contact Author)

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Ivo Maes

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

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