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Senior Fellow Liliana Rojas-Suarez was interviewed by CNN en Español on the European Central Bank’s (ECB) recent purchases of bonds from Italy and Spain. She notes that the size and duration of the intervention is important in determining its efficacy. Without a clear commitment by the ECB to act as a lender of last resort, the current monetary intervention will do little to resolve deeper economic problems within the European Union. Even more, a sustainable resolution of the crisis involves the restructuring of Italy and Spain’s bad debt in Europe’s peripheral countries.

CGD Senior fellow Liliana Rojas-Suarez discusses what implications might befell Latin American economies if the U.S. does not raise its debt ceiling.

For now, the future for Latin America looks bright. Confidence is high throughout the region after a strong rebound from the global financial crisis. But large and possibly volatile inflows of capital could lead to a credit bubble if regulators don’t take steps now to slow the large flood of hot money. In this edition of the Wonkcast I interview three members of the Latin American Shadow Financial Regulatory  Committee (CLAAF), a group prominent South American economists who meet twice yearly to offer advice to the region’s regulators and policymakers. Our focus is the group’s latest statement, which urges unconventional measures for extraordinary times.

Senior Fellow Liliana Rojas-Suarez made comments on the sovereign debt auctions held recently by several European governments. She thinks the so-called success of these auctions is relative for two reasons. First, it is important to remember that before this auction took place, the European Central Bank intervened to buy sovereign bonds in order to lower spreads in the market, which at the time were sky-high. Second, an important proportion of these bonds have been bought by local investors. It is, therefore, worrisome that the liquidity that the European Central Bank has injected into a number of European banks might be channeled (at least partly) to the purchase of sovereign bonds. The concern is that in the event of sovereign debt defaults, banking crises would also ensue.

G-20 leaders gathering in Seoul this week face a full plate of issues, most prominently the effort to stave off beggar-thy-neighbors currency devaluations. This week on the Global Prosperity Wonkcast, we've distilled highlights from a private briefing I organized where five CGD experts shared their views on key issues facing the G-20, and their implications for poor people not represented at the table. Snippets below—listen to the full 30-minute Wonkcast for the rest of the story or scroll to the bottom of this page for full event video. If you'd like a bit of historical background on the G-20 and how it came into its current role, listen to my introductory remarks (they're about 6 minutes long) that give some context for the rest of the discussion.

Latin America may be quite vulnerable to events in Europe. Beyond the risk that a deep crisis in Europe may result in double dip recession in advanced economies with deleterious global implications, Latin America's trade and financial channels with Europe are large and growing. On the other hand, as in the 1970s, capital flight from advanced economies (especially Europe) could mean more capital flowing into Latin America, offering at least a temporary relief from real sector shocks. The Latin-American Shadow Financial Regulatory Committee (CLAAF) met to address the following issues:
• Under what international scenarios will economic and financial stability in Latin America be compromised?
• Could financial systems in the region withstand a crisis in Spain's banking system?
• Is the recovery in the region sustainable or just the result of temporary capital inflows?
• How should the region's policymakers respond to current vulnerabilities? Is now the time to consider capital controls?
• In light of the recent international experience, should the role of central banks in the region be revised, and should financial regulation be reformed?

CNN en Español interviewed CGD senior fellow Liliana Rojas-Suarez on the U.S. financial reform.

Rojas-Suarez expressed concern that the Federal Reserve will only supervise entities that have an asset value of more than $50 billion, but won’t supervise the small entities which usually start banking problems like the recent crisis in the United States. She argued that the only way for the U.S. to achieve financial stabilization is by giving the Federal Reserve the authority to supervise the entire financial system.

CGD senior fellow Liliana Rojas-Suarez, principal author and editor of Growing Pains in Latin America, discusses the book and some ideas for sustainable, equitable growth in Latin America.