Balance of Payments (BOP), Fixed Exchange Rate and Impossible Trinity
100
Name two issues shared in the article
1. Large capital inflow leading to credit boom in private sector
2. Heavy reliance on short term foreign financing which facilitated rapid capital outflow in the event of unsettling development
100
What is the two main takeaway of the team?
Financial and Economic stability
300
Name the two stability concerns that the authors have in the case study.
Financial system stability and Economic stability
300
Name the three account models in Balance of Payment (BOP)
Current Account, Capital and Financial Account, Statistical Discrepancy
300
Name three elements in first issue (Large capital inflow leading to credit boom in private sector)
1. Fall in private savings
2. Strengthening of real effective exchange rate and increasingly severe current account deficit
3. Capital inflow largely comprises of short term financing
300
What are the elements mentioned in economic stability?
1. Exchange rate volatility
2. Inflation rate
3. Capital fight in emerging market
500
Name the two authors and their role in this article
Erwan Quintin, a senior economist and José Joaquín López, an economic analyst, both from the Research Department of the Federal Reserve Bank of Dallas.
500
Name three objective of impossible trinity and what it aims to achieve.
1. Fixed foreign exchange rate - Stabilise country currency
2. Free capital flow - Finance capital account deficit
3. Independent monetary policy - Manage high inflation
500
Name three elements in second issue (Heavy reliance on short term foreign financing which facilitated rapid capital outflow in the event of unsettling development)
1. Political risks and interest rate differential
2. Slowing down the peso devaluation
3. Sterilized intervention
500
What are the elements mentioned in financial stability?
1. Political stability
2. Debt reserves
3. Capital inflow
4. Foreign and local