Working Paper: NBER ID: w29441
Authors: Sebastian Edwards
Abstract: This paper deals with COVID and macroprudential regulations in emerging markets. I document the build-up of a sturdy macroprudential structure during 2009-2019, and the relaxation of regulations in 2020-2021, as part of the effort to deal with the sanitary emergency. I show that in every country, regulatory forbearance played a key role in the response to COVID. I discuss capital controls as macroprudential instruments. I argue that rebuilding the macroprudential fabric is important to reduce the costs of future systemic shocks. I maintain that post-COVID regulations should incorporate the risks associated with digital currencies.
Keywords: macroprudential policies; COVID-19; emerging markets; financial stability; regulatory forbearance
JEL Codes: E31; E52; E58; F3; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| regulatory forbearance (G28) | provision of financial assistance (F35) |
| strengthening of MAPs (E63) | reduced costs associated with future financial shocks (G52) |
| historical contexts and specific economic conditions (N91) | effectiveness of MAPs (E61) |