Turmoil in Latin America and the Caribbean: Volatility, Spillovers, and Contagion

Since June 2002, there has been an increase in the level and volatility of spreads along with pressures in the foreign-exchange markets across Latin America and Caribbean (LAC) region. These have been accompanied by political changes and greater political uncertainty in some countries. Countries such as Uruguay, Paraguay, and Bolivia have been facing losses of deposits and reserves of varying degrees of intensity.

This report analyzes potential contagion and spillover effects of the Argentine …