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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.
My guest on this Wonkcast is CGD senior fellow Liliana Rojas Suarez, who serves as chair of the Latin American Shadow Financial Regulatory Committee (CLAAF). CLAAF is comprised of financial economists and former senior financial officials from the region who meet twice a year to study a current policy issue. They then issue a statement offering advice to policymakers in the region and others interested in Latin American financial regulatory issues—or just in the region’s overall economic health.
China has had a stellar growth performance over the past two decades, growing at record rates of around 10 percent. But high growth has come along with a series on imbalances, notably overinvestment in the real estate sector and huge increase in domestic credit, all of which has caused China’s growth projections to moderate.
This is the data set for Working Paper 367 which analyzes Latin America’s financial inclusion gap, the difference between the average financial inclusion for Latin America and the corresponding average for a set of comparator countries.
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?
After the slowdown of the Chinese economy and the sharp decrease in commodity prices, the Latin American macroeconomic outlook has worsened substantially in relation to the boom that occurred between 2003 and 2012, despite favorable external conditions characterized by significantly high liquidity in international capital markets and a strong economic recovery in developed nations.
CGD continued its commitment to the subject of financial inclusion with the release this March of Financial Regulations for Improving Financial Inclusion. As co-chairs of the Task Force that produced this report, we are enthused to see much alignment between the High-Level Principles of the G20 and the CGD Task Force report.
In December, members of the Latin American Shadow Financial Regulatory Committee (CLAAF) convened at CGD to discuss global financial and monetary developments affecting Latin America. The CLAAF, which meets here twice a year, usually offers policy and regulatory recommendations for finance ministers. central bankers and financial regulators in the region. This time the committee proposed something quite different: the five-page statement CLAAF issued after two days of deliberation recommended the creation of a new regional financial institution—a Latin American Liquidity Fund, to supplement the efforts of the International Monetary Fund (IMF) when the next global financial crisis hits.
CGD policy experts are urging the International Monetary Fund to push for the inclusion of emerging market and developing countries in the re-write of bank supervision guidelines and other international financial rules that they say is likely to happen soon as a result of the global financial crisis.
“The IMF no longer has the financial heft to act as a lender of last resort,” said CGD president Nancy Birdsall. “But the IMF does have a key role to play in managing today’s crisis. Its leadership can help to restore confidence in the global financial system by insisting that China, Brazil, and other emerging market economies have a voice in rewriting international financial rules,” she said.
Birdsall said she welcomed World Bank president Robert Zoellick’s announcement Monday that he is creating a high-level commission to look into modernizing the governance of the World Bank Group, a step that a CGD working group on the future of the World Bank urged in 2005. She also voiced support for his call to replace the G7 with a new 14-member “Steering Group” that would include Brazil, China, India, Mexico, Russia, Saudi Arabia, and South Africa in addition to the current G7 members.
“Bob Zoellick seems to have taken advantage of the opportunity presented by the unsettled global economic situation and a lame duck U.S. president to open the way for overdue reform of the World Bank to give developing countries greater voice,” she said. “He’s right: more fully engaging rising Asia and other emerging markets at the bank will strengthen the bank’s role in solving urgent global problems. I hope that the leadership of the IMF will follow suit and find ways to ensure that China, India and other key countries are at the table during the re-write of global financial rules.”
Zoellick’s announcement came as the financial crisis that began with the sub-prime mortgage meltdown in the United States spread to Europe and rattled markets in Asia. CGD experts have warned that the crisis will have profound implications for developing countries.
The crisis will be topic number one when finance ministers from around the world convene in Washington this week for the annual meetings of the two Bretton Woods institutions, so-called because they were conceived at a conference in Bretton Woods, New Hampshire, in the waning days of World War II as collective means of avoiding a repeat of the Great Depression. A growing number of economists warn that the unfolding crisis could lead to the worst recession since the 1930s, yet analysts agree that neither institution has the means to avert a severe global downturn with harsh consequences for the world’s poor.
“Developing countries will be badly hurt by this crisis, yet they have had almost no role in shaping the global financial rules that fostered it,” said CGD senior fellow Liliana Rojas-Suarez, a financial economist who has held senior research positions on Wall Street and at the Inter-American Development Bank and the IMF.
Rojas-Suarez said that the IMF should push for developing countries to become active participants in the Financial Stability Forum, (FSF) which coordinates international standards and codes to strengthen financial systems. Membership is limited to a handful of high-income countries and to international financial institutions, including the IMF and the World Bank.
Another important body dominated by the high-income countries is the Basel Committee on Banking Supervision (BCBS), which issues recommendations on banks' capital adequacy requirements, most recently through the Basel II Accord. While the BCBS conducts consultations that include developing countries, rich countries make the decisions. Developing countries have long argued that these bodies fail to address their needs and concerns.
Rojas-Suarez said that she hoped that during the meetings this week IMF Managing Director Dominique Strauss-Kahn would “seize this opportunity to take leadership in the design of a system of global financial regulation that is strong yet flexible enough to meet the needs of countries with very different circumstances.”
Nora Lustig, a CGD board member and development economist who has written extensively on the poverty impacts of financial crises, and who has held senior positions in UNDP, the World Bank and the Inter-American Development Bank, said that both the IMF and the World Bank need to prepare to help developing countries cope with the effects of lower growth on their fiscal and balance of payments accounts, while the World Bank will need to focus on helping countries buffer the negative impact of the crisis on poor people.
“This may entail helping countries in designing and implementing safety net programs or expanding them where they already exist,” she said. “In the poorest countries, it may mean providing financial support to the safety net programs in the form of grants or low cost loans.”
If the global downturn proves to be deep and long lasting, the IMF and the World Bank “may have to go back to their 20th Century role of providing credit to countries that have no access to the international private capital markets,” Lustig said. “While this may not happen to middle-income countries as it did in the 1980s, the countries that are most vulnerable and least attractive to foreign investment will find it hard to access global capital markets.”
By Lawrence MacDonald, CGD director of communications and policy