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 the LAC 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 the Center for Latin American Monetary Studies (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.

On May 20, 2021, the representatives of the Associated entities that constituted the quorum to hold the meeting of the Assembly of the Center for Latin American Monetary Studies (CEMLA), which was previously convened by the Board of Governors, met by videoconference. Representatives of 22 Associated entities attended the meeting.

The meeting was held on May 6th to 7th and was inaugurated by Dr. Diego Duarte Smuller, Board Member of the Central Bank of Paraguay. The meeting started with a session on the implementation of the International Financial Reporting Standards in the central banks of the region. In the same vein, a session was dedicated to unveil the implications that some central banks have experienced in the adoption of IFRS 9 and the model of expected credit losses in the financial instruments used by the central banks. In other subjects, a full session was dedicated to budget and management aspects; particularly, it was shared how to implement and operate an ERP system and a cost-based system. The meeting served to reveal some aspects of interest regarding the accounting of cash presently and in light of its possible digitization and, finally, some of the most relevant consequences of the pandemic for the accounting issues for the Central Banks of Latin America and the Caribbean.

This note presents the main results of a study on Mexican female emigration and remittance income. The objectives of the study were, on the one hand, to present the main aspects of the profile of Mexican women who have migrated to the United States and, on the other hand, to quantify their contribution to Mexico's family remittance income. Nota de Remesas presented at the Seminar on Remittances, Migration and Gender.

Dr. Matias Ossandon Busch, from CEMLA’s Infrastructure and Financial Markets Directorate, has recently published a research paper in the Deutsche Bundesbank Discussion Paper series. The paper is coauthored by Helge C. N. Littke from Deutsche Bundesbank and is entitled Banks fearing the drought? Liquidity hoarding as a response to idiosyncratic interbank funding dry-ups.

The Latin American Journal of Central Banking, which has open access, has published a new policy paper entitled “Accounting and auditing of credit loss estimates: The hard and the soft”. The author explores how auditing could led bank management to challenge the estimation and recognition of Estimated Credit Losses (ECL) by only focusing on hard data from financial reporting and dismissing relevant information from auditing notes and public disclosures. The author proposes a combination of approaches to ensure that financial reporting accurately reflect the health of global systemically important banks (G-SIBs).

The Latin American Journal of Central Banking, which has open access, has published a new policy paper entitled “Foreign Currency Intermediation: Systemic Risk and Macroprudential Regulation”. The author explains the trade-off between the (positive) effect of foreign currency intermediation on growth in tranquil times and its (negative) effect in terms of financial fragility. He discusses the advantages of FX intermediation associated macroprudential measures over price-related measures in dealing with liquidity and FX systemic risks and shows that neutralizing systemic risks is possible without aiming at directly limiting or banning foreign currency intermediation (dedollarization).

The Latin American Journal of Central Banking and the Finance Research Letters invite the CEMLA community to submit research papers for a special issue on “New Advances in Credit Risk”. Papers on bank credit risk, counterparty credit risk, credit risk measurement modelling, portfolio credit risk, credit risk liquidity, credit risk analysis models, transmission and contagion, credit risk management, credit risk and sustainable finance, are encouraged to be submitted to this Call for Papers.

In the United States, as a consequence of the COVID-19 pandemic, employment of Mexican immigrant workers declined sharply in the months of March and April 2020, but began to recover in May. During the first three months of the current year, employment of Mexican immigrant workers in the United States increased by 256,000 occupations. In fact, at the end of March 2021, there was already an increase of 275,000 jobs compared to March 2020.

The XIV took place on April 14, 15 and 16. Manuel Ramos-Francia (CEMLA) gave the opening remarks. For her part, Anna Nordstrom (FRBNY) provided an overview of the Federal Reserve’s facilities to support global USD liquidity. Emiliano González Mota (Banco de España) focused on the challenges the managers of international reserves (IR) have been facing in the context of the monetary policy response to COVID-19. Gerardo García López (Banco de México) explained their IR management. Pamela Cardozo Ortiz (Banco de la República) described their approach to managing IR. Beltrán de Ramón (Banco Central de Chile), presented a plan to accumulate IR. Monika Znidar (ECB) provided an overview of the ECB’s IR management. The meeting included a public-private dialogue, and there were three invited talks. At the end, there was a Policy Round Table

The Fintech Forum held its IV plenary meeting from March 23 to 25, 2021, to share experiences and knowledge regarding the evolution of financial technologies and their implications for the central banking community. 

Central Bank Digital Currencies (CBDC), Global Stablecoins, bigtechs and sustainable digital finance, were the discussed topics. Dr. Manuel Ramos-Francia, Director General of CEMLA, delivered an opening speech to the Forum on foundational aspects of money and the possible introduction of both, public and private digital forms of fiat money. The keynote speaker, Dr. Hyun Song Shin, Economic Adviser and Head of Research at the Bank for International Settlements, discussed how new financial technologies could shift traditional financial and payment services.

The Fintech Forum concluded with a roundtable for the Members to be updated on current developments of the regional central banking community to embrace the fintech phenomenon with a more active regulation and surveillance.

The Latin American Journal of Central Banking, with open access, has published a new paper entitled “Pricing the exotic: Path-dependent American options with stochastic barriers”. In this paper, the authors propose a new approach to approximate the value of an American option through an extension of the Black and Scholes (1973) and Merton (1973) models, by considering different features behind currency options employed by the Central Bank of Colombia. The authors argue that this methodology could have useful applications for active practitioners employing currency derivatives and allow central banks to evaluate (ex-ante) the expected option price and the channels through which dynamic hedging operates in complex instruments.

The Latin American Journal of Central Banking, with open access, has published a new paper entitled “Should monetary policy lean against the wind in a small-open economy? Revisiting the Tinbergen rule”. This paper examines the interaction between monetary and macroprudential policies and contributes to the debate on policymakers’ response to financial imbalances in the context of a small open economy model that features both financial frictions and sticky prices. The author finds that macroprudential policies could help monetary policy stabilize the economy in the face of a financial shock. Besides, he finds that infringing the Tinbergen rule entails large welfare costs, and these costs are higher in an open economy than in a closed economy.