The Journal of International Money and Finance (JIMF) has published a new study by Dr. Matias Ossandon Busch, from CEMLA’s Directorate of Financial Stability, in coauthorship with Dr. Helge C. N. Littke from the Deutsche Bundesbank. The paper is titled Banks fearing the drought? Liquidity hoarding as a response to idiosyncratic interbank funding dry-ups, and it provides evidence on the effect of bank-specific interbank funding shocks in Brazil on the credit supply of bank branches in Brazilian regions.

The European Money and Finance Forum (SUERF) has also published a policy note summarizing the paper’s main findings. The policy note is available online in the following link.

Remittances received by Mexico from abroad raise the living standards of recipient households and reduce poverty. However, the contribution of this income is practically ignored in the measurement of poverty. This is due to the fact that the ENIGH, which is CONEVAL's basic input for its poverty measurement, only captured 6.8% of remittances in 2020, which means that almost 38 billion dollars in remittances were not considered in the referred measurement. This problem is even more serious at the state level, particularly in those states that are the main recipients of remittances and stand out for their low per capita product. In 2020, the poverty measurement did not consider remittances equivalent to 14.6 points of state GDP in the case of Michoacán; 13.1 points of GDP in Guerrero and 11.1 points of state GDP in Oaxaca's poverty measurement.

The Latin American Journal of Central Banking, which has open access, has published a new research paper entitled "A sentiment-based risk indicator for the Mexican financial sector". This paper applies sentiment analysis to text data to construct novel indicators of financial stress in Mexico. They propose a new sentiment index using three different machine learning models to analyze the sentiment embedded on Twitter messages, and build alternative sentiment indices to enhance the analysis of stress in the financial system. They find that such novel index captures the impact of sources of financial stress not explicitly encompassed in quantitative risk measures, such as financial frauds, failures in payment systems, and money laundering.

The Latin American Journal of Central Banking, which has open access, has published a new policy paper entitled "Policy report on FinTech data gaps". This paper surveys the key challenges that fintech activities represent for a regulatory reporting framework. The authors identify the most relevant fintech data gaps frm a central banking perspective, including: monetary policy, financial stability, payment systems, and economic activity. They suggest possible steps that central banks could take to overcome data gaps and improve data collection based on their current experience.

By the middle of the current year, employment of Mexican immigrant workers in the United States had already recovered from the severe decline in early 2020 due to the COVID-19 pandemic. In fact, employment levels of such workers in May-June 2021, slightly exceeded those observed in the first months of 2020.

In 2019, Latin America and the Caribbean received a record amount of remittances from abroad, which reached 93.7 billion dollars, adding sustained growth in the last ten years. The annual growth rate was 8.3% and originated above all in the development of the labor market of migrants from the region in the United States, which favored more the Central American countries and Mexico, characterized by having a greater concentration of their migrants in this country. On the other hand, migrants from South America showed lower annual growth rates of the received remittances, because they have a large proportion of their migrants in neighboring countries, which presented lower economic growth and consequently made it difficult to send remittances for their migrants who reside in them.

This meeting was held in virtual format, on 25 - 27 May 2021. The meeting aimed at sharing regional and international experiences about data governance, advances in data governance, security challenges for the use of micro-data and COVID-related data challenges in Latin America and the Caribbean. The meeting was opened by Dr. Manuel Ramos-Francia, while the Keynote session dedicated to data governance in central banks was presented by Mrs. Silke Stapel-Weber from the European Central Bank (ECB). On the other hand, Mexico and Portugal showed their experiences in data governance focusing the growing demand of microdata as a way to increase central banks' analytic capabilities. While Brazil, Norway and ECB, discussed experiences in addressing key governance challenges related to the collection and management of micro-data at central banks. An analysis of central banks' information disclosure during the COVID-19 pandemic in Latin American and the Caribbean region was presented. Finally, representatives from the FIF members shared the most relevant statistical challenges faced by central banks in the pandemic.

The seminar was held in virtual format, from July 5 to 7, 2021. The main objective of the seminar was to constitute a forum of experts with the purpose of presenting some of the advances that have been achieved in this matter in central banks and promote the exchange of experiences and ideas among them. Surveys are a very important mean by which central banks generate economic information that contributes to a better monitoring of economic and financial activity, with timely indicators of its evolution and of early warning of possible risks arising; as well as indicators that allow authorities to assess the impact of their policy decisions on the economy and the financial system. In general, the presentations made by the central bank officials covered the methodological aspects of the design and application of the surveys, and commented on the analytical usefulness of the results obtained for the central bank authorities and for other users.

The Latin American Journal of Central Banking, which has open access, has published a new research paper entitled “Commercial and banking credit network in Uruguay”. This paper proposes the use of network analysis to measure the relevance in structural terms of economic sectors and build a commercial debt network in Uruguay. Besides identifying the most central economic activities, the authors compute the centrality metrics for banking institutions given the sector’s level of indebtedness. They find that the banks with highest degree centrality in the network overlap with those that have higher capital requirements for systemic risk.

The Latin American Journal of Central Banking, with open access, has published a new research paper entitled “The contribution of the intra-firm exposures network to systemic risk.” This paper proposes an innovative measure of systemic risk, which involves the interbank and intrafirm financial exposures in Uruguay. The authors argue that overlooking intrafirm exposures could lead to underestimate the systemic risk in the financial system. In fact, they found that, based on their model, the most important source of vulnerability among banks to financial contagion comes from the real sector of the economy, as opposed to the interbank exposures.

The Regional Conference on Payments and Market Infrastructure was held in collaboration with Banco de la República (Central Bank of Colombia), from June 15 to 18, as a digital event. The Conference was inaugurated by Dr. Manuel Ramos Francia, Director General of CEMLA and General Manager Leonardo Villar, from Banco de la República (Colombia) remarking that the Conference took place amid an unprecedented context of transformation for payments and financial market infrastructures. There were two keynote speakers, from Dr. James McAndrews and Professor Rodney Garratt, both former senior members from the Federal Reserve Bank of New York. The Conference served to discuss the most relevant research and policy work for payment systems and financial infrastructures, in light of financial technologies and other important innovations taking place recently. The agenda of the Conference comprised four topics, namely: Interchange Fees, Central Banks Digital Currencies, Financial Market Infrastructures and Payments, and Retail Payments issues.

From June 21 to 23, 2021, the “Meeting of experts on good governance and transparency: autonomy of central banks” was held by videoconference, sponsored by the Banco de España and CEMLA. In the meeting, the impact of some effects of the COVID-19 pandemic on the different frameworks of action of central banks, in particular, with regard to their independence, governance, functions and transparency was analyzed. It was stressed that the theme of the meeting is extremely timely at this time when central banks have had to take extraordinary actions in response to the economic crisis caused by the pandemic.

In June was held the Seminar on Remittances, Migration, and Gender, where the results of the study carried out by CEMLA, IDB-Lab, and Banorte on the case of Mexico were presented. The study focused on identifying the profile of Mexican woman immigrants in the United States and the remittances they send to Mexico. The Banorte database used in the study included records of 9,490,221 remittance transfers, 30.6% of which were made by women. The study highlighted that remittances sent by women are 20% lower in value than those sent by men and that women are the main beneficiaries of transfers (71%) regardless of the gender of the sender. In terms of financial inclusion, the records showed that only 18.7% of these transactions were made as an account deposit.   

With the collaboration of the Banco Central de Costa Rica and the participation of central banks, statistical institutes, remittance service providers, and international organizations, in June was held the “Seminar on the results of migration, remittance and financial inclusion surveys collected from Costa Ricans and Nicaraguans emigrants” who visited their country in the December 2019 period. The survey covered aspects of the profile of these immigrants, gender, age, education, sector of activity in which they work, income levels, sending and amount of remittances, indicators of financial inclusion, and others. The study represents an effort by CEMLA, as part of the activities developed by the Latin American and Caribbean Remittances Forum, and the Remittances and Financial Inclusion Program, carried out by CEMLA and IDB-LAB, of the Inter-American Bank group. developmental.

A research team from CEMLA (Dr. Carola Müller, M.S. Raúl Morales Reséndiz, and M.S. Anahí Rodriguez Martínez) together with M.S. José Aurazo have been awarded financial support under the FIT IN Initiative developed with the support of the Bill & Melinda Gates Foundation and supervised by Toulouse School of Economics (TSE). The team studies the effects of fintech payment aggregators into retail payments markets on financial inclusion, optimal interchange fees and welfare of consumers and merchants under conditions that prevail in many emerging economies. The project is entitled: An interchange model for fintech in payments in emerging economies: The case of sub-acquirers in payment cards.

In 2019, 78% of residents in Costa Rica (CR) born abroad were Nicaraguans, making them the main group of foreigners in that country. As a reflection of the above, in that year, the flow of remittances from CR to Nicaragua represented 77.4% of the total flow of remittances originated in CR. This document presents the results of a survey that was applied to Nicaraguan citizens residing in CR who visited their country on the occasion of the Immaculate Conception festivities and the December 2019 period. The survey covered various aspects of the profile of these immigrants, such as gender, age, education, sector of activity in which they work abroad and income levels, remittances and the value of the transfers, as well as indicators of financial inclusion. This study represents a joint effort by CEMLA, as part of the activities developed by the Latin America and Caribbean Remittances Forum, and the Remittances and Financial Inclusion Program, carried out by the IDB-LAB, of the Inter-American Development Bank group and CEMLA.

The Latin American Journal of Central Banking, which has open access, has published a new policy paper entitled “Dinero Electrónico: The rise and fall of Ecuador's central bank digital currency (CBDC)”. This paper, by Professor Rodney Garratt and co-authors, discusses the circumstances and details on the rise and fall of this CBDC system deployed by Banco Central del Ecuador between 2014 and 2018. They show the importance of public-private coordination for such an extremely important project that constituted one the early experiments on the field of CBDCs.

This seminar was held from June 1–3 and it was jointly organized by CEMLA and the Banco de España. The main objective of the seminar was to constitute a forum of experts with the purpose of presenting some of the advances that have been achieved in this matter in central banks and promoting the exchange of experiences and ideas among them. The results of 19 studies carried out by officials from six central banks in the region, the Banco de España and the IMF were presented. The subject matter covered by the presentations is a reflection of the relevance that the use of Big Data and Data Science has acquired in different spheres of activities of central banks, such as accounting, communication, economics and finance. Its use is intended to contribute to a better monitoring and forecasting of economic and financial activity; as well as to the elaboration of indicators that allow the authorities to evaluate the impact of their policy decisions, and the way they communicate them, on the economy and the financial system.

The Latin American Journal of Central Banking, which has open access, has published a new research paper entitled “Shallow or deep? Training an autoencoder to detect anomalous flows in a retail payment system”. This paper applies deep learning to detect anomalous payment flows in retail payment systems. The authors implement a neural network known as an autoencoder to detect complex changes in the liquidity outflows among participants of a payment system. They find that this novel technique have the potential to become a useful tool for payments system oversight, in particular for the risk management toolkit run by operators and regulators.

The Latin American Journal of Central Banking, with open access, has published a new policy paper entitled “The spillover effects of economic policy uncertainty in Latin America on the Spanish economy”. The authors develop indexes of economic policy uncertainty (EPU) for Latin American economies, based on reports in the Spanish press. They find that unexpected shocks in EPU dampen trade relationships between Spain and Latin American economies, leading Spanish firms to decrease their investments in and exports to economies that experience negative shocks in EPU.

In May, with the participation of central banks, statistical entities, remittances services providers, and international organizations were held the “Round Table on the Effects of COVID-19 in Migration, Remittances and Finance Inclusion.” During the event was consensus among the experts that the growth of remittances received in the region during the pandemic was surprisingly higher than expected. Some factors hurt the sending of remittances at the beginning of the pandemic, such as the closure of remittance sending points and the decrease in labor activity. But other factors such as the development of contactless shipping instruments, the adoption of financial support programs by the governments, and the use of their savings, made it possible to recover these shipments. The recovery of the economies also allowed that remittance flows increased even more during the last months, setting a new record.