Rethinking Bretton Woods | Fri, Mar 30, 2012
On February 27-28, Center of Concern co-organized a regional meeting “Analysis and Proposals for the Consolidation of the Regional Financial Architecture, ” in the city of Caracas, Venezuela.
On February 27-28, 2012, Center of Concern co-organized a regional meeting on the theme “Analysis and Proposals for the Consolidation of the Regional Financial Architecture.” The meeting, held in the city of Caracas, Venezuela, was hosted and co-convened by the intergovernmental organization Latin America and Caribbean Economic System (SELA) and brought together representatives from regional financial mechanisms, ministries of finance and central banks of the Latin America/Caribbean region, and experts.
In a speech at the opening of the meeting, the Secretary General of SELA, Amb. Jose Rivera, highlighted the uncertainty of the international context, in which “the global economy is about to enter a deep slowdown and a scenario of weak growth in the coming years.” Mentioning that Latin America and the Caribbean today are, in aggregate terms, as dependent on commodities trade as it was half a century ago, he explained that the weakening of global demand could punish the terms of trade in the region. Some countries exhibit – especially by comparison to the developed economies—public debt and reserve indicators that are more favorable, perhaps enabling them to respond with countercyclical policies such as those implemented in 2009-2010 but, he cautioned, “in some countries in Central America and the Caribbean the fiscal situation is more complex… as their external balances have been more exposed to the fluctuations [of food and oil] markets.”
Center of Concern staff Aldo Caliari, also speaking at the opening session, said that his organization had, since the beginning of the global financial crisis, warned that the impact of the crisis in developing countries would be fundamentally marked by the insertion in international trade and the importance of trade in national economies. This, he said, followed from the fact that trade and exports as a proportion of GDP represent roughly double in developing countries than in industrialized ones. Forecasts do not anticipate that demand from traditional markets will go up in the medium term, so intra-regional trade should be promoted as a priority. “It is in this regard that regional monetary cooperation arrangements are called to play a primordial role,” he said.
In an extensive background study produced for the meeting, Professor Jaime Estay, from the University of Puebla, in Mexico, presented a survey of the progress on reforming the international financial architecture and the main elements needed to progress towards a regional financial and monetary architecture.
The seminar also considered lessons from the evolution of regional cooperation in other regions. Dr Oscar Ugarteche, from the National Autonomous University of Mexico established what were some of the missing aspects in the European financial cooperation design, in a presentation on the theme “Challenges of Regional Financial Cooperation: Lessons from the European problems.” Dr Daniel Titelman, of ECLAC, made a presentation putting the Latin American Reserve Fund in comparison with the Asian Chiang Mai Initiative and the Arab Monetary Fund.
An Outcome Document issued by the participating governments said that the region “has taken positive and important steps in the area of financial cooperation, both under pre-existing schemes and innovative mechanisms, which are intended not only at responding directly to the needs and potentials of participating countries, but also at becoming options to be considered within the broader context of the region as a whole.”
The document also noted participants’ interest in the proposals made to create a Regional Contingency Fund, a Regional Development Bank and a Regional Monetary Space as “priority elements in order to make progress towards a regional monetary and financial architecture.”
(Click here for information in Spanish).