This paper reviews policy tools that have been used and/or are available for policymakers in the region to lean against the wind and review relevant country experiences using them. The instruments examined include: (i) capital requirements, dynamic provisioning, and leverage ratios; (ii) liquidity requirements; (iii) debt-to-income ratios; (iv) loan-to-value ratios; (v) reserve requirements on bank liabilities (deposits and nondeposits); (vi) instruments to manage and limit systemic foreign exchange risk; and, finally, (vii) reserve requirements or taxes on capital inflows. Although the instruments analyzed are mainly micro-prudential in nature, appropriately calibrated over the financial cycle they may serve for macroprudential purposes. Emerging market economies (EMEs), including Latin America, currently face a juncture of easy external financing conditions that are conducive to credit exuberance, asset price bubbles, and excess demand booms, which increase the risk to a sudden reversal (IMF, 2011c). Appropriately managing the procyclicality of the financial system is thus a policy priority to avoid the emergence of financial excesses and vulnerabilities in the banking sector and, more generally, in other segments of the economy (Eyzaguirre et al, 2011; IMF, 2010a,b,c and 2011a,e). However, the use of traditional macroeconomic policy instruments to confront such external environment may run into limits. For instance, monetary policy can be constrained as interest rate hikes to contain financial exuberance are likely to trigger more capital flows, which would stimulate financial and economic excesses. Foreign exchange intervention is likely to have only temporary effects and may, at the same time, impose large quasi-fiscal costs (IMF 2011c). 2 Traditional instruments may also be inefficient to confront particular financial risks that build up in a boom.