Provisioning Requirements in Latin America: Where does the Region Stand?

The recent international financial crisis has brought to the forefront the need to improve financial regulatory and supervisory frameworks. In particular, compliance with international regulatory standards in developed countries proved inadequate to contain excessive risks taken by individual financial institutions and those generated by the financial system as a whole. Although the distinction between risks at the individual financial institution level and at the financial system level is not new (and certainly well recognized by a number of Latin American countries, as will be discussed below), the crisis made it evident that most regulatory frameworks around the world did not adequately incorporate these differences.