Local Currency Bond Markets in Latin America

Bruno Cabrillac Directeur général adjoint des Études et des Relations internationales, Banque de France. Contact : bruno.cabrillac@banque-france.fr..
Marie-Hélène Ferrer Chef du Service des relations monétaires internationales, Banque de France. Contact : marie-helene.ferrer@banque-france.fr.


The quality and predictability of macroeconomic policies in Latin America have been improving over the last twenty years and the development of local currency bond markets has increased. However, capital flows volatility remains high inducing exchange rates volatility and the improvement of macroeconomic policies looks to falter. Accordingly, (consequently?), the development of local currency bond markets stopped in 2012 in Latin America but kept pace in emerging Asia. Today, Latin America emerging economies face a term of trade shock resulting from lower commodity prices and potential restrictive global financial conditions. As a result, there is a stronger case than ever for specific policies promoting the development of local currency bond markets, helped by the international community, as committed by G7 and G20.


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