# Monetary and Fiscal History of Latin America Author: [[Keogh]] ## Review - Discusses the interaction of the banking system, monetary and fiscal policy. How this led to the macroeconomic instability of Latin America from 1960-1990 and how the system evolved after that. - In the case of brazil, there was passive monetary policy and large fiscal programs which could expand the money supply in an unconstrained way. The central bank was not independent in it's monetary policy - There was financial repression which confiscated savings from the banking system. - Banks were forced to provide subsidized credit to government entities. - there were limited avenues for debt/bond financing to sterlizie money. - various government entities had access to deficit financing through indirect accounts at the central bank and through overdraft facilities. - A significant portion of the deficit was off the books from the official deficit, either through state owned entities or through subsidized credit. - money supply expansion and seignorage were a large driver of the persistent hyperinflation. ## Key Ideas ## Related