CGD Policy Blogs
Ensuring Financial Stability in the Era of COVID-19: Recommendations for Latin America and the Caribbean
With a surging pandemic, income losses, and a deepening recession, Latin America and the Caribbean is facing a health and economic crisis that will test its financial systems like few events in modern times. The blow, however, can be softened. Banks as well as governments and central banks can play a crucial role, providing financing to lessen the impact on families and firms and to speed the recovery.
In a surprise move Tuesday, the US Treasury announced its intention to nominate Mauricio Claver-Carone to the presidency of the Inter-American Development Bank (IDB), a role traditionally held by a citizen of a borrowing member country from the region.
In late April, CGD’s senior fellow Liliana Rojas-Suarez and distinguished non-resident fellow Mauricio Cárdenas participated in an event organized by Columbia University to discuss the economic prospects in Latin America. They were joined by the director of sovereign ratings at Fitch, Richard Francis, and the director of the Western Hemisphere department at the IMF, Alejandro Werner
Where Policy and Research Meet: Takeaways from Workshops on CGD's New Policy Decision Tree for Financial Inclusion
On October 10, CGD, in collaboration with the Alliance for Financial Inclusion (AFI), held a workshop in Mexico City to discuss CGD’s innovative tool that serves to diagnose the crucial impediments to digital financial inclusion in specific country contexts. There, we shared a draft of CGD’s A Decision Tree for Improving Financial Inclusion. The event brought together more than 20 high-level representatives from central banks, ministries of finance, and other authorities involved in the design and implementation of their countries’ national strategies for financial inclusion.
Despite a broad recognition that increased access to financial services can bring significant benefits to the poor, catalyzing economic development, financial inclusion in emerging markets and developing economies continues to lag far behind expectations. While a large number of countries have implemented policy changes to advance digital financial inclusion, results have been mixed. To that end, we are developing a first-ever DFS decision-making tool, A Decision Tree for Improving Financial Inclusion - an analytical framework that allows a systematic identification of the most problematic constraints for financial inclusion in country-specific settings.
As Basel III is transforming the global financial landscape, we hope that policymakers from both advanced economies and EMDEs, as well as multilateral organizations, can work together effectively to ensure that Basel III truly becomes a global public good—promoting financial stability and supporting economic growth for all.
How Will Increased External Uncertainties Shape Latin America’s Economic Growth and Stability in 2019?
As we start out 2019, a growing consensus has been forming among experts and market participants: the increased volatility in international capital markets and rising trade tensions of 2018 will not abate in 2019, and in fact may have adverse spillover effects on economic growth and stability of emerging markets and developing economies (EMDEs). How will this challenging international environment shape prospects for Latin America?
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 3: An Unlevel Playing Field Between Domestic and Foreign Banks Might Increase Governments’ Funding Costs
Responding to the latest assessment of Mexico’s implementation of the Basel III recommendations, the Mexican authorities argued that regulations for countries hosting foreign banks’ subsidiaries and for the parent countries of the subsidiaries should be aligned “in order to prevent distortions due to the asymmetric treatment of similar risk exposures by home and host jurisdictions,” which could result in an unlevel playing field between foreign subsidiaries and domestic banks.
Basel III & Unintended Consequences for Emerging Markets and Developing Economies - Part 2: Effects on Trade Finance
Just as Basel III, among other factors, played a role in the decline in the volume of cross-border lending from advanced economies to EMDEs, it created incentives for a shift in the composition of these flows. Banks’ exposures to certain business lines have been affected, including those that are crucial for development like trade finance and infrastructure finance (the latter will be the subject of a future blog).