Central bank credibility questions, Paraguay’s bank failure

Events this week have raised concerns about monetary policy credibility in the region’s two largest economies, Brazil and Mexico, which could point to weaker currencies and steeper yield curves. Elsewhere, the collapse of Paraguay’s sixth largest bank, Ueno Bank, this week doesn’t appear to point to broader financial stability risks. But the crisis has caused political turmoil which threatens to hold up reforms that have underpinned the economy’s strong growth record.