First lessons of the current crisis for financial regulation and supervision in Latin America and the Caribbean

More than a year after the beginning of the current financial crisis, the causes that originated the crisis are quite clear. The evolution of the crisis, contrary to the somewhat naïve perspective that was dominant, confirmed that financial markets suffer from severe limitations that prevent their self regulation. Latin America has suffered several financial crises during the last 30 years and the social consequences, in terms of output losses, and unemployment and poverty increases, have been very costly. Although many countries have improved their financial regulation and supervision, the ongoing crisis, although not originated in the LAC region, highlights some key shortcomings that are also present in the region’s financial systems.

In order to obtain lessons that are relevant for the Latin American financial systems,  the original paper (in Spanish) analyzes in detail the antecedents and first causes of the current crisis, the serious deterioration in the credit origination and distribution process, the role played by derivatives, and presents statistical information that supports such analysis.

Inflation, commodity prices, terms of trade, and fiscal sustainability in Latin America and the Caribbean

Since mid 2007 inflation in Latin America surged substantially, ending a 5 year long period of inflation reduction. Initially food and fuel prices accounted for the bulk of the increase in headline inflation, but progressively core inflation rose as well, indicating that the old price propagation mechanisms were still alive in spite of successful stabilization […]