Publication:
Reducing Vulnerability to Speculative Attacks

dc.contributor.author Calvo, Sara
dc.date.accessioned 2012-08-13T15:13:49Z
dc.date.available 2012-08-13T15:13:49Z
dc.date.issued 1999-02
dc.description.abstract The note focuses on the speculative attack on domestic assets, which can occur irrespective of country's fiscal situation, suggesting political economy considerations may be the reason. However, recent events have reopened the debate on how to reduce vulnerability to capital outflows in developing countries, though other risk factors have been identified, which if minimized, can still reduce vulnerability to speculative attacks. It addresses the perils of inconsistent macroeconomic policies, as evidenced in Argentina, where the Central Bank was financing the government's budget deficit by creating money, while trying to keep the exchange rate fixed. Moreover, a speculative attack on bonds, instead of currency, can also lead to a devaluation, such as a sudden shift in perceptions about macroeconomic stability, may lead to a loss in reserves, as in Mexico's 1994 crisis, when high interest rates associated with a currency defense was perceived as intolerable. This is substantiated through case studies, which further include the expectation of realized contingent liabilities, a drop in tax revenues associated with business cycles driven by capital inflows, and investor refusal to roll over debt in countries other than the crisis country, know as contagion. Recommendations include the adoption of consistent macroeconomic policies; reduction of debt rollover risks; strengthening financial regulation; and, capital flows regulation. en
dc.identifier http://documents.worldbank.org/curated/en/1999/02/828306/reducing-vulnerability-speculative-attacks
dc.identifier.uri http://hdl.handle.net/10986/11497
dc.language English
dc.publisher World Bank, Washington, DC
dc.relation.ispartofseries PREM Notes; No. 16
dc.rights CC BY 3.0 IGO
dc.rights.holder World Bank
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject BALANCE OF PAYMENTS
dc.subject BANK LIQUIDITY
dc.subject BANK RUNS
dc.subject BANKING CRISIS
dc.subject BONDS
dc.subject BUDGET DEFICIT
dc.subject BUDGET DEFICITS
dc.subject BUSINESS CYCLE
dc.subject BUSINESS CYCLES
dc.subject CAPITAL ACCOUNT
dc.subject CAPITAL FLOWS
dc.subject CAPITAL INFLOWS
dc.subject CAPITAL OUTFLOWS
dc.subject CENTRAL BANK
dc.subject CONTAGION
dc.subject CONTINGENT LIABILITIES
dc.subject CURRENCY CRISES
dc.subject DEBT
dc.subject DEBT FINANCING
dc.subject DEVALUATION
dc.subject DEVELOPING COUNTRIES
dc.subject DEVELOPMENT ECONOMICS
dc.subject DOMESTIC CREDIT
dc.subject ECONOMIC POLICY
dc.subject EQUILIBRIUM
dc.subject EXCHANGE RATE
dc.subject EXCHANGE RATE REGIMES
dc.subject EXCHANGE RATES
dc.subject EXPORTS
dc.subject FINANCIAL CRISES
dc.subject FINANCIAL INSTITUTIONS
dc.subject FINANCIAL SECTOR
dc.subject FIXED EXCHANGE RATE
dc.subject FIXED EXCHANGE RATES
dc.subject FLOATING EXCHANGE RATE
dc.subject FOREIGN CURRENCY
dc.subject GOVERNMENT BUDGET
dc.subject GOVERNMENT BUDGET DEFICIT
dc.subject IMPORTS
dc.subject INTEREST RATES
dc.subject INTERNATIONAL MONETARY FUND
dc.subject INTERNATIONAL RESERVES
dc.subject LIQUID LIABILITIES
dc.subject LIQUIDITY
dc.subject M2
dc.subject MACROECONOMIC POLICIES
dc.subject MONEY DEMAND
dc.subject POLITICAL ECONOMY
dc.subject POLITICAL SUPPORT
dc.subject POVERTY REDUCTION
dc.subject REAL EXCHANGE
dc.subject REAL EXCHANGE RATE
dc.subject RESERVE REQUIREMENTS
dc.subject SHORT-TERM DEBT
dc.subject SOLVENCY
dc.subject SPECULATIVE ATTACKS
dc.subject TAX REVENUES
dc.subject VOLATILITY
dc.subject VULNERABILITY SPECULATION
dc.subject ASSET LIABILITY MANAGEMENT
dc.subject FISCAL MANAGEMENT
dc.subject ECONOMIC POLICY
dc.subject RISK MANAGEMENT
dc.subject VULNERABILITY
dc.subject MACROECONOMIC CORRELATIONS
dc.subject CASE STUDIES
dc.subject FINANCING OPTIONS
dc.subject BUDGET DEFICITS
dc.subject MONEY SUPPLY
dc.subject EXCHANGE RATE POLICY
dc.subject BOND RATINGS
dc.subject CURRENCY DEVALUATION
dc.subject FINANCIAL CRISES
dc.subject CONTINGENT LIABILITY
dc.subject TAX REVENUES
dc.subject BUSINESS CYCLES
dc.subject CAPITAL INFLOWS
dc.subject ROLLOVER ASSURANCES
dc.subject CONTAGION
dc.subject MACROECONOMIC POLICY
dc.subject DEBT SERVICE REDUCTION
dc.subject FINANCIAL REGULATION
dc.subject CAPITAL FLOWS
dc.subject REGULATORY FRAMEWORK
dc.title Reducing Vulnerability to Speculative Attacks en
dc.title.alternative Como reducir la vulnerabilidad frente a los ataques especulativos? en
dspace.entity.type Publication
okr.doctype Publications & Research :: Brief
okr.doctype Publications & Research
okr.docurl http://documents.worldbank.org/curated/en/1999/02/828306/reducing-vulnerability-speculative-attacks
okr.globalpractice Macroeconomics and Fiscal Management
okr.globalpractice Environment and Natural Resources
okr.globalpractice Finance and Markets
okr.identifier.externaldocumentum 090224b082eefaa8_2_0
okr.identifier.internaldocumentum 828306
okr.identifier.report 21251
okr.language.supported en
okr.pdfurl http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/01/20/000094946_01010605373564/Rendered/PDF/multi_page.pdf en
okr.region.administrative Latin America & Caribbean
okr.region.administrative Europe and Central Asia
okr.region.administrative East Asia and Pacific
okr.region.country Sweden
okr.region.country Thailand
okr.region.country Russian Federation
okr.region.country Argentina
okr.region.country Mexico
okr.topic Economic Theory and Research
okr.topic Macroeconomics and Economic Growth :: Macroeconomic Management
okr.topic Macroeconomics and Economic Growth :: Economic Stabilization
okr.topic Financial Crisis Management and Restructuring
okr.topic Environmental Economics and Policies
okr.topic Finance and Financial Sector Development
okr.topic Environment
okr.unit Development Economics and Chief Economist
okr.volume 1 of 1
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