Publication:
Reducing Vulnerability to Speculative Attacks

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dc.contributor.authorCalvo, Sara
dc.date.accessioned2012-08-13T15:13:49Z
dc.date.available2012-08-13T15:13:49Z
dc.date.issued1999-02
dc.description.abstractThe 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.identifierhttp://documents.worldbank.org/curated/en/1999/02/828306/reducing-vulnerability-speculative-attacks
dc.identifier.doi10.1596/11497
dc.identifier.urihttps://hdl.handle.net/10986/11497
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPREM Notes; No. 16
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectBALANCE OF PAYMENTS
dc.subjectBANK LIQUIDITY
dc.subjectBANK RUNS
dc.subjectBANKING CRISIS
dc.subjectBONDS
dc.subjectBUDGET DEFICIT
dc.subjectBUDGET DEFICITS
dc.subjectBUSINESS CYCLE
dc.subjectBUSINESS CYCLES
dc.subjectCAPITAL ACCOUNT
dc.subjectCAPITAL FLOWS
dc.subjectCAPITAL INFLOWS
dc.subjectCAPITAL OUTFLOWS
dc.subjectCENTRAL BANK
dc.subjectCONTAGION
dc.subjectCONTINGENT LIABILITIES
dc.subjectCURRENCY CRISES
dc.subjectDEBT
dc.subjectDEBT FINANCING
dc.subjectDEVALUATION
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPMENT ECONOMICS
dc.subjectDOMESTIC CREDIT
dc.subjectECONOMIC POLICY
dc.subjectEQUILIBRIUM
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATE REGIMES
dc.subjectEXCHANGE RATES
dc.subjectEXPORTS
dc.subjectFINANCIAL CRISES
dc.subjectFINANCIAL INSTITUTIONS
dc.subjectFINANCIAL SECTOR
dc.subjectFIXED EXCHANGE RATE
dc.subjectFIXED EXCHANGE RATES
dc.subjectFLOATING EXCHANGE RATE
dc.subjectFOREIGN CURRENCY
dc.subjectGOVERNMENT BUDGET
dc.subjectGOVERNMENT BUDGET DEFICIT
dc.subjectIMPORTS
dc.subjectINTEREST RATES
dc.subjectINTERNATIONAL MONETARY FUND
dc.subjectINTERNATIONAL RESERVES
dc.subjectLIQUID LIABILITIES
dc.subjectLIQUIDITY
dc.subjectM2
dc.subjectMACROECONOMIC POLICIES
dc.subjectMONEY DEMAND
dc.subjectPOLITICAL ECONOMY
dc.subjectPOLITICAL SUPPORT
dc.subjectPOVERTY REDUCTION
dc.subjectREAL EXCHANGE
dc.subjectREAL EXCHANGE RATE
dc.subjectRESERVE REQUIREMENTS
dc.subjectSHORT-TERM DEBT
dc.subjectSOLVENCY
dc.subjectSPECULATIVE ATTACKS
dc.subjectTAX REVENUES
dc.subjectVOLATILITY
dc.subjectVULNERABILITY SPECULATION
dc.subjectASSET LIABILITY MANAGEMENT
dc.subjectFISCAL MANAGEMENT
dc.subjectECONOMIC POLICY
dc.subjectRISK MANAGEMENT
dc.subjectVULNERABILITY
dc.subjectMACROECONOMIC CORRELATIONS
dc.subjectCASE STUDIES
dc.subjectFINANCING OPTIONS
dc.subjectBUDGET DEFICITS
dc.subjectMONEY SUPPLY
dc.subjectEXCHANGE RATE POLICY
dc.subjectBOND RATINGS
dc.subjectCURRENCY DEVALUATION
dc.subjectFINANCIAL CRISES
dc.subjectCONTINGENT LIABILITY
dc.subjectTAX REVENUES
dc.subjectBUSINESS CYCLES
dc.subjectCAPITAL INFLOWS
dc.subjectROLLOVER ASSURANCES
dc.subjectCONTAGION
dc.subjectMACROECONOMIC POLICY
dc.subjectDEBT SERVICE REDUCTION
dc.subjectFINANCIAL REGULATION
dc.subjectCAPITAL FLOWS
dc.subjectREGULATORY FRAMEWORK
dc.titleReducing Vulnerability to Speculative Attacksen
dc.title.alternativeComo reducir la vulnerabilidad frente a los ataques especulativos?en
dspace.entity.typePublication
okr.date.doiregistration2025-04-29T10:14:11.648016Z
okr.doctypePublications & Research::Brief
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/1999/02/828306/reducing-vulnerability-speculative-attacks
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeEnvironment and Natural Resources
okr.globalpracticeFinance and Markets
okr.guid489511468282534481
okr.guid364481468295841674
okr.guid851871468305656104
okr.identifier.externaldocumentum090224b082eefaa8_2_0
okr.identifier.internaldocumentum828306
okr.identifier.report21251
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2001/01/20/000094946_01010605373564/Rendered/PDF/multi_page.pdfen
okr.region.administrativeLatin America & Caribbean
okr.region.administrativeEurope and Central Asia
okr.region.administrativeEast Asia and Pacific
okr.region.countrySweden
okr.region.countryThailand
okr.region.countryRussian Federation
okr.region.countryArgentina
okr.region.countryMexico
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicFinancial Crisis Management and Restructuring
okr.topicEnvironmental Economics and Policies
okr.topicFinance and Financial Sector Development
okr.topicEnvironment
okr.unitDevelopment Economics and Chief Economist
okr.volume1 of 1
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