Limits to Foreign Exchange Net Open Positions and Capital Requirements in Emerging Economies
33 Pages Posted: 3 Feb 2018
Date Written: January 30, 2018
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: Suggested Citation