The region is therefore better prepared to face adverse shocks. Latin American countries are implementing prudent monetary policies, showing sounder fiscal positions, reducing currency mismatches, holding positive external balances, applying  BIS Review 7/2007  1  more flexible exchange regimes, building up reserves as a preventive mechanism, and paying back debt with international organizations in an effort to improve their liability management.
6  However, it is important to emphasize that the design and implementation of structural reforms face a number of challenges.