Representative Office for the Americas

Rising economic and policy uncertainty coupled with geopolitical tensions can have wide macro-financial implications in the Americas. In the domestic context, such uncertainty can impact key economic variables, including consumption, investment, consumer and business sentiment, inflation, exchange rates and equity markets. In the international context, increased economic and policy uncertainty in foreign countries can impact the economies of the Americas by affecting their external demand, capital flows, exchange rates and asset prices. Further, geopolitical or policy-related tensions can have significant effects on trade, foreign direct investment, banking and portfolio flows to these countries. Heightened uncertainty poses challenges for monetary policy not only because of its consequences on the economy but also due to the need to adapt analytical approaches in innovative ways such as developing new measures of uncertainty and financial conditions or how to incorporate these factors into the central bank's models.

In March 2025, the BIS Consultative Council for the Americas (CCA) launched its seventh Research Network for 2025–26 focusing on the implications of heightened economic and policy uncertainty for the macroeconomy and financial stability in the Americas. The Network seeks to: 1) help central banks produce high-quality research papers on the impact of heightened uncertainty on the economies of the Americas; and 2) enhance the technical capacity of CCA central banks so that they can better study these issues going forward.

The Network comprises senior researchers from seven central bank members of the CCA – Argentina, Canada, Chile, Colombia, Mexico, Peru and the United States (both the Federal Reserve Bank of New York and the Federal Reserve Board). It has convened regularly to hold bilateral virtual meetings between academic advisers and the authors, as well as workshops with all members to gather feedback and advance the projects.

The network was chaired by Alejandrina Salcedo of the Bank of Mexico in 2025 and will be chaired by Adrian Armas of the Central Reserve Bank of Peru in 2026. Yuriy Gorodnichenko (UC Berkeley) and Gianluca Benigno (University of Lausanne) serve as the academic advisers for the Network. The work of the Network will conclude with the 16th CCA annual research conference in Peru in the fourth quarter of 2026.

Climate change and environmental degradation are increasingly becoming macro-relevant developments. Physical and transition risks from climate change can cause large losses to the financial sector. Weather events such as droughts, floods and hurricanes, as well as wildfires, can seriously impact populations and the productive capacity of economies, with a first-order impact on growth and inflation. The loss of biodiversity, natural assets and ecosystem services can undermine the basis for economies to function. Yet these issues are still poorly understood both in economics research and in the work of many central banks. While there is strong recognition of the importance of the issues, central bank research has been struggling to keep pace with external developments.

In December 2022, the Consultative Council for the Americas (CCA) launched its sixth Research Network, covering the macro-financial implications of climate change and environmental degradation. The Network had two main goals: 1) to help central banks create a medium-term agenda of high-quality research on the impact of climate and environmental issues on the economies of the Americas; and 2) to build up technical capacity in central banks so they can better study these issues going forward.

The Network consisted of senior researchers at central banks from countries throughout the Americas, ie from the BIS Consultative Council for the Americas (CCA) – Argentina, Brazil, Canada, Chile, Colombia, Mexico, Peru, the United States (both the Federal Reserve Bank of New York and the Federal Reserve Board) – and additional central banks from The Bahamas, Costa Rica, the Eastern Caribbean Currency Union and Uruguay. It convened regular virtual meetings and webinars where members can present early-stage work or external presenters can help participants build their knowledge on specific climate and environmental issues.

The network was chaired by Elías Albagli of the Central Bank of Chile. Tamma Carleton (UC Santa Barbara), Eric Strobl (University of Bern) and Roberto Schaeffer (Federal University of Rio de Janeiro) served as the academic advisers for the network. The work of the network concluded in December 2024 with a special edition of the CCA annual Research Conference.

Monetary policy frameworks and communication are continuously being refined and improved as central banks learn from previous experiences. Since the Great Financial Crisis (GFC) of 2007-09, in particular, financial stability considerations and the use of multiple instruments have gained greater importance. As a result, communication has also become more complex. Most of the economies in the region were not severely affected by the GFC, since they had implemented solid macroeconomic adjustments in the years preceding the crisis. However, emerging market economies in general have had to deal with the large swings in capital flows since then, due to abundant liquidity and a global search for yield.

The research conducted within this network investigated how monetary policy communication affects financial markets, including expectations of future inflation and interest rates. It also reassessed the importance of the monetary policy transmission mechanism.

The network was part of a wider effort by the BIS to boost research on monetary policy frameworks, one of the research priorities of the BIS under the Innovation BIS 2025 strategy. Other initiatives included one comprising a small number of advanced economy central banks and another involving the Office for Asia and the Pacific.

Michael McMahon (University of Oxford) and José De Gregorio (Universidad de Chile and former Governor of the Central Bank of Chile) served as academic advisers for this network.

Meetings

• Workshop of the Fifth BIS CCA research network on "Monetary Policy Frameworks and Communication", Mexico City, 20-21 February 2020
• Final Conference of the BIS-CCA Research Network on "Monetary policy frameworks and Communication", held virtually on 8-10 March 2021

This research network analysed the key determinants of exchange rate fluctuations and their impact on prices and trade volumes, with a particular focus on disaggregated data.

Countries in the region have recently experienced significant swings in their nominal exchange rates, especially vis-à-vis the US dollar. The economies in the region are much more integrated commercially and financially than in the past. The influences of external factors on their exchange rates may have also increased. Against this backdrop, it is key for central banks in the region to investigate whether and why the determinants and the effects of currency movements on prices, trade and policies have changed.

A distinguishing feature of the research carried out as part of this network was the use of micro or disaggregated data on prices and quantities. This approach is expected to shed new light on old questions in international economics.

Ariel Burstein (University of California, Los Angeles) was the academic adviser for this network. 

Several contributions from the network's researchers were published in a special issue of the Journal of International Money and Finance. Read the introduction to the special issue and find all the published articles on this page.

Meetings

• Closing conference: "Exchange rates: key drivers and effects on inflation and trade", Mexico City, 9-10 August 2018
• Workshop on "Exchange rates: key drivers and effects on inflation and trade", Mexico City, 1-2 February 2018

Papers  

• Import prices and invoice currency: evidence from Chile by Fernando Giuliano and Emiliano Luttini
• Effects of a mandatory local currency pricing law on the exchange rate pass-through by Renzo Castellares and Hiroshi Toma
• Estimating the effect of exchange rate changes on total exports by Thierry Mayer and Walter Steingress
• Industry heterogeneity and exchange rate pass-through by Camila Casas
• Retailer markup and exchange rate pass-through: Evidence from the Mexican CPI micro data by Fernando Pérez-Cervantes

This research network focused on:

• The interaction between the commodity cycle and the real cycle. Commodities and investment (contribution to GDP growth and potential growth); commodity booms and sectoral composition of growth (Dutch disease); commodity booms and overestimation of potential output (both as overstating component of growth potential and inducing real and financial imbalances which end up in economic adjustment).
• Financial aspects of the commodity cycle. Vulnerabilities associated with the commodity cycle (for example, leverage of commodity producers/exporters and implications of a cycle reversal, financial inflow booms and busts, commodity prices and exchange rates, and the resulting spillovers to the domestic financial sector); commodity prices and foreign reserves or foreign asset holdings (public and private). A corollary to this second theme is the implication of these financial aspects for real activity and monetary policy responses.

Professor Joshua Aizenman was the academic adviser for this network.

Several contributions from the network's researchers were published in a special section of the Journal of International Money and Finance. Read the introduction to the special section and find all the published articles at the bottom of this page.

Meetings

• Workshop on "The commodity cycle: macroeconomic and financial stability implications", Mexico City, 29-30 October 2015
• Closing conference: "The commodity cycle: macroeconomic and financial stability implications", Mexico City, 18-19 August 2016

Papers 

• The dynamics of investment projects: evidence from Peru by Rocío Gondo and Marco Vega
• Commodity price risk management and fiscal policy in a sovereign default model by Bernabe Lopez-Martin, Julio Leal and Andre Martinez Fritscher
• Volatility risk premia and future commodities returns by José Renato Haas Ornelas and Roberto Baltieri Mauad
• Business cycles in an oil economy by Drago Bergholt, Vegard H Larsen and Martin Seneca
• Oil, equities, and the zero lower bound by Deepa Datta, Benjamin K Johannsen, Hannah Kwon and Robert J Vigfusson
• Macro policy responses to natural resource windfalls and the crash in commodity prices by Frederick van der Ploeg

The research network focused on the inclusion of financial stability considerations as well as macroprudential instruments in central bank models. The network led to substantial cooperation between central bank modelling teams in the region. Professor Enrique Mendoza acted as academic adviser to the network.

Meetings

• BIS CCA closing conference, "Incorporating financial stability considerations into central bank policy models", Mexico, 29-30 January 2015
• BIS CCA research network conference, "Incorporating financial stability considerations into central bank policy models", Mexico, 28-29 October 2013

Papers

• Macroeconomic effects of banking sector losses across structural models by L Guerrieri, M Iacoviello, F Covas, J Driscoll, M Jahan-Parvar, M Kiley, A Queralto and J Sim
• Macroprudential policies in a commodity exporting economy by A González, F Hamann and D Rodríguez
• Phases of global liquidity, fundamentals news, and the design of macroprudential policy by J Bianchi and E Mendoza
• Credit and macroprudential policy in an emerging economy: a structural model assessment by H Aguirre and E Blanco
• A policy model to analyze macroprudential regulations and monetary policy by S Alpanda, G Cateau and C Meh
• Traditional and matter-of-fact financial frictions in a DSGE model for Brazil: the role of macroprudential instruments and monetary policy by F de Carvalho, M Castro and S Costa
• Spillovers, capital flows and prudential regulation in small open economies by P Castillo, C Carrera, M Ortiz and H Vega

The research network focused on studying the behaviour of foreign exchange markets and the characteristics and effects of foreign exchange market operations at a relatively high (daily or higher) frequency, using traditional analyses of foreign exchange market intervention and fundamentals as well as the so-called microstructure approach. The research network relied on the unique central bank expertise regarding the operation of the foreign exchange markets, which was enhanced through research collaboration. Research papers made use of high-frequency data sets of central bank transactions in FX markets. Professor Kathryn Dominguez acted as academic adviser to the network.

Meetings

• The effects of foreign exchange market operations in Latin America, Cartagena, 29-30 November 2012

Papers

• The effects of intraday foreign exchange market operations in Latin America: results for Chile, Colombia, Mexico and Peru by M Fuentes, P Pincheira, J M Julio, H Rincón, S García-Verdú, M Zerecero, M Vega, E Lahura and R Moreno
• Asymmetric effects of FOREX intervention using intraday data: evidence from Peru by E Lahura and M Vega
• On central bank interventions in the Mexican peso/dollar foreign exchange market by S García-Verdú and M Zerecero
• The impact of pre-announced day-to-day interventions on the Colombian exchange rate by J J Echavarría, L F Melo, S Téllez and M Villamizar
• Interventions and inflation expectations in an inflation targeting economy by P Pincheira
• Order flow and the real: indirect evidence of the effectiveness of sterilized interventions by E Kohlscheen