Financial Development in Latin America and the Caribbean : The Road Ahead
The financial systems of the Latin America and the Caribbean region (LAC) are at a crucial juncture. After a history of recurrent instability and crisis (a trademark of the region), they now seem well poised for rapid expansion. Since the last wave...
| Main Authors: | , , |
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| Format: | Publication |
| Language: | English |
| Published: |
World Bank
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000333038_20111202011315 http://hdl.handle.net/10986/2380 |
| Summary: | The financial systems of the Latin
America and the Caribbean region (LAC) are at a crucial
juncture. After a history of recurrent instability and
crisis (a trademark of the region), they now seem well
poised for rapid expansion. Since the last wave of financial
crises that swept through the region in the late 1990s and
early 2000s, financial systems in LAC have continued to gain
in soundness, depth, and diversity. The size of banking
systems has increased, albeit from a low base; local
currency bond markets have greatly developed, both in
volumes and in reach over the yield curve; stock markets
have expanded; and derivative markets particularly currency
derivatives have grown and multiplied. Institutional
investors have become more important relative to banks,
making the financial system more complex and diversified.
Importantly, much progress has been made in financial
inclusion, particularly through the expansion of payments,
savings, and credit services to lower income households and
microenterprises. As evidence of their new soundness and
resiliency, financial systems in the region, except in some
Caribbean countries, weathered the recent global financial
crisis remarkably well. The progress in financial
development in LAC no doubt reflects substantial
improvements in the enabling environment, lower
macroeconomic volatility, more independent and
better-anchored currencies, increased financial
liberalization, lower currency mismatches and foreign debt
exposures, enhanced effectiveness of regulation and
supervision, and notable improvements in the underlying
market infrastructures (for example, trading, payments,
custody, clearing, and settlement). This regional flagship
report aims at providing such a stocktaking and forward
looking assessment of the region's financial
development. Rather than going into detail about
sector-specific issues, the report focuses on the main
architectural issues, overall perspectives, and
interconnections. The value added of the report thus hinges
on its holistic view of the development process, its broad
coverage of the financial services industry (not just
banking), its emphasis on benchmarking, its systemic
perspective, and its explicit effort to incorporate the
lessons from the recent global financial crisis. |
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