Why impact on Latin America has been muted in this crisis?

Jaime Caruana, General Manager of the BIS has given an insightful speechon the big question- How and Why the global crisis did not effect Latin America as much? They usually have been affected severely in the past irrespective of the origin of the crisis.

Caruana looks at the region as a whole and not individual economies. The main reason was limiting currency mismanagement in balance sheets of banks and other firms. This was achieved by three painful adjustments:

a) the adoption of flexible exchange rates combined with higher levels of forex reserves;
(b) the development of local currency bond markets; and
(c) strong regulation of the liquidity of banks’ foreign currency positions.

The speech is a great read with numerous graphs and tables. It reviews the role of international banks in the region and main concern seems to be coming from them.  

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One Response to “Why impact on Latin America has been muted in this crisis?”

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