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

33 Pages Posted: 3 Feb 2018

See all articles by Marc Hofstetter

Marc Hofstetter

Universidad de los Andes

Jose Ignacio Lopez

Universidad de los Andes, Colombia - Department of Economics

Miguel Urrutia

Universidad de los Andes, Colombia - Department of Economics

Date Written: January 30, 2018

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.

Keywords: Foreign Exchange Open Positions, Capital Requirements

JEL Classification: G21, F42, F23

Suggested Citation

Hofstetter, Marc and Lopez, Jose Ignacio and Urrutia, Miguel, Limits to Foreign Exchange Net Open Positions and Capital Requirements in Emerging Economies (January 30, 2018). Documento CEDE No. 2018-10, Available at SSRN: https://ssrn.com/abstract=3116943 or http://dx.doi.org/10.2139/ssrn.3116943

Marc Hofstetter (Contact Author)

Universidad de los Andes ( email )

Carrera Primera # 18A-12
Bogota, DC D.C. 110311
Colombia

Jose Ignacio Lopez

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia
5713394949 (Phone)

HOME PAGE: http://joseignaciolopez..com

Miguel Urrutia

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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