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AmericasAugust 29 2010

Central Bank of Paraguay on the country's need to diversify

Jorge Raúl Corvalan, governor of the Central Bank of ParaguayIn his two years as governor of the Central Bank of Paraguay, Jorge Raúl Corvalan has presided over a dramatic cut in interest rates (though these are now rising again to prevent the economy overheating) and increased access to banking services and mortgages. The country has stepped up bank regulation and is enjoying increasing GDP with no fiscal deficit. Mr Corvalan speaks to The Banker about the need to diversify Paraguay's economy and the measures he is taking to improve training for central bank staff. Writer Silvia Pavoni
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Central Bank of Paraguay on the country's need to diversify

Q: You took on the role as central bank governor at a very difficult time, in 2008, just before the financial crisis hit Paraguay, and took some tough measures to tackle it, such as reducing interest rates from 16% to less than 3%. What was the market's reaction?

A: I think our monetary policy was very successful. When I became central bank governor, the rest of the world had interest rates close to 0%. If we hadn't reduced ours, we would have run the risk of a disproportionate exchange rate appreciation, which would have affected our exports. Paraguay relies on agriculture and is very sensitive to international prices.

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Silvia Pavoni is editor in chief of The Banker. Silvia also serves as an advisory board member for the Women of the Future Programme and for the European Risk Management Council, and is part of the London council of non-profit WILL, Women in Leadership in Latin America. In 2019, she was awarded an honorary fellowship by City University of London.
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