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She is also the chair of the Latin American Shadow Financial Regulatory Committee (CLAAF). From March 1998 to October 2000, she served as managing director and chief economist for Latin America at Deutsche Bank. Before joining Deutsche Bank, Rojas-Suarez was the principal advisor in the Office of Chief Economist at the Inter-American Development Bank. Between 1984-1994 she held various positions at the International Monetary Fund, most recently as deputy chief of the Capital Markets and Financial Studies Division of the Research Department. She has been a visiting fellow at the Institute for International Economics, a visiting advisor at the Bank for International Settlements and has also served as a professor at Anahuac University in Mexico and advisor for PEMEX, Mexico’s National Petroleum Company. Rojas-Suarez has also testified before a Joint Committee of the US Senate on the issue of dollarization in Latin America.
She has published widely in the areas of macroeconomic policy, international economics and financial markets in a large number of academic and other journals including Journal of International Economics, Journal of International Money and Finance, Journal of Development Economics, Journal of Contemporary Economic Policy, International Monetary Fund Staff Papers. She has also published or being cited in prestigious newspapers such as the Financial Times, the Wall Street Journal and the Washington Post. She is also regularly interviewed by CNN en Español.
Michael P. Dooley & Donald J. Mathieson & Liliana Rojas-Suarez, 1997. "Capital Mobility and Exchange Market Intervention in Developing Countries" NBER Working Papers 6247, National Bureau of Economic Research, Inc.
Rojas-Suarez, L & Weisbrod, S-R, 1997. "Financial Markets and the Behavior of Private Savings in Latin America" Working Papers 340, Inter-American Development Bank, Research Department.
McNelis, P.D. & Rojas-Suarez, L., 1996. "Exchange rate depreciation, Dollarization and Uncertainty: A Comparison of Bolivia and Peru" Working Papers 325, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Banking crises in Latin America: Experience and Issues" Working Papers 321, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Building Stability in Latin American Financial Markets" Working Papers 320, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Managing Banking Crises in Latin America: The Di's and Don'ts of Successful Bank Restructuring Programs" Working Papers 319, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S., 1994. "Achieving Stability in Latin American Financial Markets in the Presence of Volatile Capital Flows" Working Papers 304, Inter-American Development Bank, Research Department.
In an essay in November's LatinFinance magazine (subscription required), CGD Senior Fellow Liliana Rojas-Suarez questions how appropriate prudential financial regulation can be designed in Latin America to contain the risks from high external capital volatility. Her answer is that it can be done, but not with the current regulatory approach, which largely consists of efforts to directly control financial aggregates such as liquidity expansion and credit growth. Rojas-Suarez recommends an alternative "pricing-risks-right" approach that, she argues, can go a long way in limiting the adverse impact of high capital flow volatility on local financial markets.
According to Rojas-Suarez, traditional prudential regulatory policies cannot effectively contain the problems associated with capital flow volatility because they do not take adequate consideration of the particular risk features of financial sectors in Latin America. The reliance on capital adequacy rations, therefore, has not been effective. A better approach would be to create incentives for financial institutions in Latin America to "price right" the risks inherent to their assets. Such an approach might go a long way to mitigate the adverse effects from capital account volatility.
There are particular features that distinguish Latin America's financial markets, such as shallow financial intermediation with very small capital markets, the predominance of assets and liabilities with short maturity, and high volatility in key financial variables, including the deposit base. Rojas-Suarez argues these features reflect depositors' lack of confidence in domestic financial systems, which, in turn, makes these systems highly vulnerable to capital flow volatility.
A Two-Tiered Approach
For the least financially developed group of countries, where no capital standard works because basic conditions are not in place, the challenge is to identify and develop indicators of banking problems that reveal the true riskiness of banks. Countries such as Ecuador, Colombia, Venezuela and Nicaragua could benefit from an approach that encouraged the public offering of uninsured certificates of deposit, and that published inter-bank bid-and-offer rates to improve the flow of information of bank quality. Additionally, these countries should encourage the process of financial internationalization; market depth can only be achieved if a diverse group of investors and users of capital allow the market to become less concentrated.
For the second group of relatively more financially developed countries (such as Chile, and to a lesser extent, Brazil, Uruguay, Jamaica, Peru, Panama, and Trinidad and Tobago) the main recommendation is to design a capital standard that appropriately reflects the risk of banks' assets. There are two important policy recommendations for this group of countries. First, governments should adequately assess the risk features of their own liabilities when calculating capital requirements. Second, countries should develop risk-based regulations in loan-loss provisioning.
The historic 2002 United Nations Conference on Financing for Development in Monterrey, Mexico, overlooked a crucial question: regionalism. Financing Development: The Power of Regionalism is designed to correct this omission.
After more than a decade of financial sector liberalization, both of domestic markets and of international financial transactions (capital account liberalization), policymakers in many developing countries remain concerned about the effects that large and highly volatile capital flows have on their financial systems. However, in spite of the tremendous costs associated with the resolution of crises and signs of discontent among the population with the outcome of some reforms, to date there is no significant evidence indicating a reversal of the reform process. While one could advance a number of hypotheses explaining this "commitment to reforms," developing countries’ decisions and actions seem to indicate that policymakers perceive capital inflows as a necessary component to achieve growth and development.