balance sheet items, etc. Nevertheless, the items in the balance sheet, as well as risk and performance indicators selec!ed may be adapted or modified accordingly. One of the main characteristics of the model presented here is its modularity, The model may be used as an independent financial analysis model in which the user examines the performance of a bank, but without necessarily being "connected" to the macro-economy. Other option is to use the model as a macro-economic framework wiLhout a very detailed monetary system.

The paper contains six main sections, incJuding the present introduction. In Section 1I we describe thc. methodology of 'he paper. In Section III we present the overall structure of the model, with an emphasis on the monetary accounts. In Section IV we apply the model to the case of Uruguay. In Section V we perform a few representative simulations to show how our model may be used in practice. Finally, in Section VI we provide our concluding remarks. We relegate most tables to Appendices A and B. An algebraic description of the full model is given in Appendix C.

# **II. Methodology**

Traditionally, economic analysis in the World Bank has generally focused on either the "real" or the "financial" sectors, but rarely on the interaction Letween the two. The introduction of the "extended" Revised Minimum Standard Model, or RMSM-X, reflects a recognition in the World Bank of the importance of incorporating the financial system in the macro-economy (see Serven [1990] and Ventura [1991]). The RMSM-X is a useful macroeconomic tool for analyzing developing economies. It represents an improvement over the earlier RMSM in that it allows the user to examine the long-term interaction of broad fiscal and monetary policies in the economy. For example, the r 'el may be used to examine whether the banking sector may be induced to mobilize available savings from surplus sectors and transfer them--through the creation of appropriate claims--to deficit sectors, in consistency with the targets in the economy.

Nevertheless, the monetary module in the RMSM-X is too aggregated to allow for any meaningful analysis of the viability of a count.y's financial system, or any institution in particular. The basis of the financial module in the RMSM-X is the Monetary Survey, which follows the presentation shown in the _International Financial Statistics_ (IFS), published by the IMF. One of the main criteria of the Monetary Survey is to provide, for each country, a standard set of analytic aggregates that emphasize similarities amo,.g countries in economic processes and policy choices. For example, in measuring the money supply, the IFS considers a standardized measure of money that considers analytically significant for all countries (see IMF [19841, _A Guide to Money and Banking in the IFS)._ While standardization is needed for the sake of simplicity and cross-country comparisons it is, nonetheless, done at the expense of depth and detail. It is clear that banks in each country have different objectives, management practices, and market strengths and weaknesses. Financial analysis must be done within the context of the particular country and economic environment.

By design, The RMSM-X provides only a generic framewcrk, or "platform", that then may be adapted to particular cases. Indeed, some authors have modified and extended the RMSM-X framework to allow for a less restrictive treatment of the financial sector (see eg, Serven [19901 for an application to Chile). However, the modifications have been ad-hoc and focusing less on a systematic way to analyze financial performance, or the impact of financial restructuring and deregulation in the ec.onomy. The ideal way to analyze a bank or financial system i:. using a time series that shows developing trend lines ard by comparison with peer banks withiin the same country. Such an analysis requires an adequate level of detail and a consistency of content, interpretation, and presentation of the data, plus an adequate 3