USING SIGNAL PROCESSING TOOLS FOR REGULATION ANALYSIS AND IMPLEMENTATION: THE CASE OF THE RESERVE REQUIREMENT RULES FOR THE FOREIGN EXCHANGE TRANSACTIONS ON THE MEXICAN BANKING SYSTEM

Abstract

Regulators often face the challenge of designing and implementing rules that both, respond to the policy objectives and that can be clearly referred to the day-to-day operations and practices in the marketplace. In many cases, the actual codes end up being a cumbersome collection of conditions that are very difficult to evaluate and re-design. This paper suggests that sorne of the most commonly used tools in Signal Processing could offer a convenient vehicle for tackling these difficulties. By starting from a SIMULINK@ model of the regulation of Bank of Mexico on the foreign exchange transactions of commercial banks, this papers offers an example of how those tools could be used in this context.