The central bank and financial derivatives: the case of currency options

This article examines the role of currency options as monetary policy instruments in central banking, highlighting their implications for managing exchange rate volatility and the accumulation of international reserves. The research focuses on the experiences of Mexico and Colombia, where options programs have been implemented to mitigate exchange rate risks. Using a descriptive and comparative approach, the study analyzes data collected on the operation of these instruments in both countries, from 1996 to 2001 in Mexico and since 1999 in Colombia. The results reveal that, while options can be effective in stabilizing the exchange rate and accumulating reserves, their implementation requires that market intermediaries be properly positioned to maximize the effectiveness of these measures. The implications for economic policy suggest that the central bank can benefit from the use of derivatives, although the associated risks must be carefully considered, including potential unlimited losses and the need for a more developed derivatives market, as observed in the Peruvian context. (Abstract and audio: Department of Economic Publications)