Featuring the members of the Latin-American Shadow Financial Regulatory Committee (CLAAF):
Liliana Rojas-Suarez, President, CLAAF; Senior Fellow and Director, Latin America Initiative, Center for Global Development
Guillermo Calvo, Professor, Columbia University; former Chief Economist, Inter-American Development Bank
Carmen Reinhart, Professor, Harvard Kennedy School
Pablo Guidotti, Dean and Professor, School of Government, Universidad Torcuato di Tella; Former Vice-Minister of Finance, Argentina
Ernesto Talvi, Director, CERES; Former Chief Economist, Central Bank of Uruguay
Guillermo Perry, Non-resident fellow, Center for Global Development; Professor, Universidad de los Andes; Former Minister of Finance, Colombia
Roque Benjamin Fernandez, Professor, Universidad del CEMA; former Minister of Finance, Argentina
Alberto Carrasquilla, Partner, Konfigura Capital LTDA; former Minister of Finance, Colombia
Laura Alfaro, Professor, Harvard Business School; former Minister of National Planning and Economic Policy, Costa Rica
Pedro Carvalho de Mello, Professor, Universidade de Sao Paulo; former Commissioner, Comissao de Valores Mobiliarios, Brazil
A slowdown in China’s growth is a serious concern for Latin America, especially for those countries that have benefited from a record-setting boom in commodity prices since 2003. Much of the slowdown is due to structural reforms in China, partly prompted by the tepid and uncertain recovery of its large trade partners, namely, the US and EU.
Lurking in the background, however, is growing concern about possible macroeconomic instability due to China’s domestic credit boom, which has been accompanied by the emergence of unregulated and fast growing “shadow banks.” A disruption of the banking system cannot be ruled out and could result in a major growth contraction in China.
How big is this risk? And what are the implications for Latin America? What are the advantages of China’s financial expansion in the region, and how can policymakers make the most of these, while minimizing the risks?
The upcoming meeting of the Latin America Shadow Financial Regulatory Committee, CLAAF, will explore these questions by addressing the following topics:
• Should Latin American policymakers be delighted or concerned about the increasing presence of Chinese banks in the region?
• What are the financial channels of contagion from China to Latin America? If there is a Chinese credit crunch, will the US—Latin America’s other major market—become entangled?
• Are there lessons for China from Latin America regarding the sequencing of financial liberalization and the resolution of financial troubles?