Mr. Charles Enoch, Wouter Bossu, Carlos Caceres, and Ms. Diva Singh
With growth slowing across much of the Latin America as a result of the end of the commodity supercycle and economic rebalancing in China, as well as fragmentation of the international banking system, policies to stimulate growth are needed. This book examines the financial landscapes of seven Latin American economies—Brazil, Chile, Colombia, Mexico, Panama, Peru, and Uruguay—and makes a case for them to pursue regional financial integration. Chapters set out the benefits to the region of financial integration, the barriers to cross-border activity in banks, insurance companies, pension funds, and capital markets, as well as recommendations to address these barriers. Finally, the volume makes the case that regional integration now could be a step toward global integration in the short term.
Mr. David Coady, Mr. Benedict J. Clements, and Mr. Sanjeev Gupta
Using cross-country analysis and case studies, this book provides new insights and potential policy responses for the key fiscal policy challenges that both advanced and emerging economies will be facing.
Intraregional financial activity in Central America has grown substantially in the past decade, contributing to efficiency and economic development. At the same time, the expansion of activities by regional conglomerates has increased the challenges to supervisory authorities of containing the risks of contagion. Prepared as part of the Central America Financial Sector Regional Project by an IMF and World Bank staff team, this book outlines trends in the region's financial sector integration, supervisory responses, development of the insurance sector, payment and securities settlement arrangements, and worker remittances. It addresses the many common policy challenges facing Central American countries--Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama--in financial sector reform. The book offers key policy recommendations.
One of the most complex issues in tax policy today is the treatment of the institutions, products, and services that make up the financial sector. It can be harder to ascertain income, expenses, and profits for financial firms than for firms selling goods and services, and it is easier for individuals and firms to manipulate financial transactions so as to exploit tax loopholes. This volume explores the challenges faced by tax policymakers and identifies modern best practices in several areas: banks, insurance companies, securities companies, investment funds, pension funds, and derivatives.
Export credit agencies play an important role in international trade and investment flows. Exports insured or financed by the approximately 50 export credit agencies that are members of the Berne Union account for about 10 percent of their countries exports, which, in turn, represent about 78 percent of world exports. The IMF estimates that in 1997 debts to Berne Union members accounted for more than 21 percent of the total indebtedness of developing countries and economies in transition. Edited by Malcolm Stephens, this book provides useful background information to those whose involvement in international trade and investment brings them into contact with the services of export credit agencies.
Written by Joseph Gold, former General Counsel and now Senior Consultant at the IMF, these volumes contain discussions of the ever-increasing body of cases in which the Articles have had a bearing on issues before the courts.
Market capitalizations in the LA-7 (Brazil, Chile, Colombia, Mexico, Panama, Peru, and Uruguay) are moderate in size by emerging market standards; however, continued growth and development will depend on improving liquidity conditions across the region. At the end of 2015, capitalization of LA-7 equity markets was 32 percent of regional GDP, while the value of domestically traded bonds outstanding was about 62 percent of GDP (Figure 6.1). In dollar terms, the largest bond and equity markets are in Brazil and Mexico. Despite solid market capitalizations, low trading volumes are a growing concern. Shrinking liquidity is attributed to deteriorating macroeconomic conditions, high transaction costs, and the outsized role of institutional investors and their buy-and-hold strategies.
Luc Eyraud, Ms. Diva Singh, and Mr. Bennett W Sutton
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.
Many factors indicate that now may be the time for Latin American economies to work toward greater regional financial integration. This would not be a substitute for wider integration in the world economy; some Latin American economies are among the most active in global initiatives. However, given the recent economic slowdown in much of the region, limited progress in pursuing global agreements, and the widespread withdrawal of global financial institutions from emerging markets (including those in Latin America), regional financial integration could help buttress the economies of Latin America, enhance competition, and—over the medium term—lead the way toward global integration.
In the countries that make up the LA-7 (Brazil, Chile, Colombia, Mexico, Panama, Peru, and Uruguay), insurance penetration (measured by premiums in percent of GDP) remains low, ranging from 1 to 4 percentage points of GDP, although the sector has expanded at a significant rate over the past decade. In 2014, assets totaled almost 10 percent of regional GDP, influenced in many cases by changes in the domestic regulatory frameworks. Broadening of formal sectors and larger nominal losses from natural disasters are likely to fuel the non-life segment, whereas purchases of life and retirement products have been growing the life portion of the insurance sector for some time now. The sector’s growth is partly stymied by the limited availability of long-term financial instruments denominated in the domestic currency, given that their demand is often crowded out by pension funds.