Abstract

After a period of endemic economic and financial crises during the 1980s to 1990s, many Latin American countries opened up their previously closed economies to international financial institutions at the turn of the millennium, aiming to attract capital, gain technical expertise, and cushion themselves against regional instability. In some extreme cases, such as Mexico and Uruguay, the financial system came to be completely dominated by global banks, with few or no domestic banks remaining. In addition, their experience with financial crises prompted most Latin American countries to implement stricter financial regulations. The strategy of importing global institutions and know-how, together with tighter regulations, appeared to have served the region well: with the exception of the Argentine and Uruguayan crises of 2001–02, none of the largest Latin American banking systems have suffered a financial crisis in the new century. Even the global financial crisis of 2008–09 caused relatively little harm, with high commodity prices fortuitously buffering exports and growth in this resource-rich region.

A New Strategy for a New Normal