Peru perfectly illustrates how to use cumulative international reserves during periods of large capital inflows to reduce vulnerabilities in the financial system, such as that resulting from dollarization, IMF Director of the Western Hemisphere Department Alejandro Werner said.
Remarks were made during a RBWC’s 6th Annual Conference session, a side event held in Lima within the framework of the WBG/IMF Annual Meetings and organized by the Central Reserve Bank of Peru (BCR), the Reinventing Bretton Woods Committee and UBS.
The official stressed the current level of international reserves provides central banks the possibility to cope with a possible capital outflow scenario.
In his opening speech, BCR’s Governor Julio Velarde said that even though most of the impact of the Federal Reserve-FED’s higher interest rates has already been assimilated, we have to remain alert to the side effects, since the stimulus withdrawal will entail lower levels of international liquidity.
The event addressed financial and monetary changes at the global level, and the challenges and results involved. It brought together renowned international economists such as Nobel laureate in economics Joseph Stiglitz, as well as academics, analysts and representatives of the world’s most prominent investment banks.
Stiglitz, a Columbia University professor, noted the need of a new paradigm to develop macroeconomic models that incorporate banks and their behavior.
Other topics involved China’s downturn, how authorities face this slower growth, challenges arising from changing their model into a domestic consumption-oriented one and, impacts on raw materials and the rest of merging economies.
(END) JCC/JCC/RMB/MVB
Published: 10/7/2015