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She is also the chair of the Latin American Committee on Macroeconomic and Financial Issues (CLAAF) and Adjunct Professor at the School of International and Public Affairs at Columbia University, New York. From March 1998 to October 2000, she served as managing director and chief economist for Latin America at Deutsche Bank. Before joining Deutsche Bank, Rojas-Suarez was the principal advisor in the Office of Chief Economist at the Inter-American Development Bank. Between 1984 and 1994 she held various positions at the International Monetary Fund, most recently as deputy chief of the Capital Markets and Financial Studies Division of the Research Department. She has been a visiting fellow at the Institute for International Economics, a visiting advisor at the Bank for International Settlements and at the Central Bank of Spain. She has also served as a professor at Anahuac University in Mexico and advisor for PEMEX, Mexico’s National Petroleum Company. Rojas-Suarez has also testified before a Joint Committee of the U.S. Senate on the issue of dollarization in Latin America.
She has published widely in the areas of macroeconomic policy, international economics and financial markets in a large number of academic and other journals including Journal of International Economics, Journal of International Money and Finance, Journal of Development Economics, Journal of Contemporary Economic Policy, International Monetary Fund Staff Papers. She has also published or being cited in prestigious newspapers such as the Financial Times, the Wall Street Journal and the Washington Post. She is also regularly interviewed by CNN en Español.
Michael P. Dooley & Donald J. Mathieson & Liliana Rojas-Suarez, 1997. "Capital Mobility and Exchange Market Intervention in Developing Countries" NBER Working Papers 6247, National Bureau of Economic Research, Inc.
Rojas-Suarez, L & Weisbrod, S-R, 1997. "Financial Markets and the Behavior of Private Savings in Latin America" Working Papers 340, Inter-American Development Bank, Research Department.
McNelis, P.D. & Rojas-Suarez, L., 1996. "Exchange rate depreciation, Dollarization and Uncertainty: A Comparison of Bolivia and Peru" Working Papers 325, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Banking crises in Latin America: Experience and Issues" Working Papers 321, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Building Stability in Latin American Financial Markets" Working Papers 320, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S.R., 1996. "Managing Banking Crises in Latin America: The Di's and Don'ts of Successful Bank Restructuring Programs" Working Papers 319, Inter-American Development Bank, Research Department.
Rojas-Suarez, L. & Weisbrod, S., 1994. "Achieving Stability in Latin American Financial Markets in the Presence of Volatile Capital Flows" Working Papers 304, Inter-American Development Bank, Research Department.
Access to financial services -- ranging from credit to the use of electronic means of payment -- is crucial for growth and poverty reduction. This new working paper by CGD senior fellow Liliana Rojas-Suarez tells why access to financial services is low in Latin America and suggests innovative solutions. Among the recommendations: public-private partnerships to improve financial literacy; training specialized juries to adjudicate financial disputes in ways that protect the rights of borrowers and creditors; and regulatory changes to speed the spread of technology offering financial services to low-income families and small firms.
Watch Rodrigo de Rato's keynote address, Renewing the IMF's Commitment to Low-Income Countries.
The head of the International Monetary Fund said he will propose giving developing countries a greater say in how the IMF is run. IMF Managing Director Rodrigo de Rato said that he would put forward the proposals to increase developing country representation on the Fund’s board ahead of the Annual Meetings of the IMF and the World Bank in Singapore in September.
De Rato spoke at a CGD event Monday in which he reaffirmed the IMF's commitment to assisting low-income countries. He said that the IMF would focus on its core macroeconomic expertise: helping poor countries to avoid falling back into excessive debt and to manage increases in aid.
He also repeated a pledge to address calls by low-income countries and emerging markets for greater representation in the Fund. "Low-income countries as well as clearly under-represented emerging market economies have reason to be concerned about their voice and representation in the Fund," he said.
"I will be making specific proposals on how to take these governance issues forward in the run-up to our Annual Meetings in September in Singapore, and I hope to secure the support of the membership for these," he said.
Kemal Dervis, the administrator of the United Nations Development Programme (UNDP), welcomed de Rato's reaffirmation of the IMF's involvement in low-income countries and the pledge to address governance issues. "I strongly welcome the managing director's words…on governance, voice and greater weight for poor countries in the IMF board," he said.
Dervis, a former CGD non-resident fellow, is the author of A Better Globalization: Legitimacy, Governance, and Reform. De Rato first announced plans to increase developing country representation on the Fund’s board at the 2006 Spring Meetings.
De Rato's reaffirmation of the Fund's interest in helping low-income countries comes at a time when improved macroeconomic policies in many poor countries mean less demand for IMF bailouts and supervision, and as a shift from loans to grants has led some people to question whether the IMF still needs to be actively engaged in poor countries.
"The Fund has already made an important contribution to lowering debt," de Rato said in his speech, Renewing the IMF’s Commitment to Low-Income Countries. "However, the Fund still has another important task before it: to ensure that there is not another debt crisis."
To avoid another debt crisis, the international community must offer poor countries alternative financing, he said. "It is important that the international community address the urgent needs of the low-income countries by offering sufficient grants and highly-concessional loans to enable them to finance development without relying on expensive loans," he said.
For developing countries to be able to plan effectively, such aid should be more predictable and should be delivered more efficiently, he said. He added that the Fund could help by advising poor countries on how to deal with potential risks from higher aid, including undue currency appreciation and higher inflation.
Like Dervis, the other two panelists--Ricardo Hausmann, director of the Center for International Development at Harvard University, and CGD vice president Dennis de Tray--also welcomed the IMF reaffirmation of support for low-income countries.
Hausmann, who previously served as chair of the IMF-World Bank Development Committee, the main intergovernmental coordinating body for the two global financial institutions, argued that the Fund's strategy for poor countries focuses too much on poverty reduction and the Millennium Development Goals and not enough on economic growth.
De Tray, who served as IMF resident representative in Viet Nam in the 1990s, and recently as World Bank country director for the Central Asian Republics, questioned whether the Fund could become open to learning and flexible enough at the country level to become a valued partner. Such changes in the culture of the IMF would take many years, he said.
Following questions from the floor, CGD senior fellow Liliana Rojas-Suarez, who moderated the discussion, summed up the views of the panel and the audience in just two words. "Welcome and caution," she said. "Welcome to your efforts… and caution because people still question the extent to which the current institutional environment can change as quickly as you would like."
*Watch Rodrigo de Rato' keynote address, Renewing the IMF's Commitment to Low-Income Countries. (If you are having problems streaming the video it is also available for download. [98 MB] )
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"Here is one of the key agendas any multilateral organization should have. I fully recognize the great recommendations made in this Report...Recommendations three and six are profound and insightful."--Luis Alberto Moreno, President of the Inter-American Development BankDownload the PDF of A New Era at the Inter-American Development Bank
How should the Inter-American Development Bank (IDB) respond to the challenges of the new century? As recently as the early 1990s, governments and policymakers in Latin America and the Caribbean relied on the IDB and other multilateral institutions not only as important sources of finance but also for ideas and technical assistance in designing economic policies. Partly as a result of this advice, many countries implemented wide-ranging market-oriented reforms to accelerate their integration into the world economy. But the perception grew that the agenda advised by Washington and the multilaterals did not represent the interests of the region. The failure of the reforms to fully satisfy expectations for more rapid growth and poverty reduction heightened tensions. Meanwhile, countries developed stronger local economic expertise, vastly improving the quality of the domestic policy debate.
As a result, the market for the IDB’s services has changed dramatically. Rapid growth in private capital flows has made its financial resources less important than in the past. And political leaders are increasingly articulating their own vision on how to bring about inclusive growth in Latin America and the Caribbean, thereby reducing their need for advice from Washington. Yet the region is struggling with complex economic challenges that cannot adequately be addressed by individual nations or regional groupings, such as the Organization of American States. And there is no shortage of problems to be solved. The IDB’s mission of promoting inclusive growth is closely aligned with the region’s most pressing needs.
The selection of a new president to lead the IDB presents an opportunity for the institution to reassess its role and reshape its products and services to better address current challenges. In response to this opportunity, the Latin American Shadow Financial Regulatory Committee and the Center for Global Development prepared this report for Luis Alberto Moreno, the new president of the IDB. This Report lays out key challenges facing the institution, explains how the Bank is uniquely poised to address them, and offers six recommendations for the new president to consider as he launches what can and should be a new era at the IDB.
This new report by a group comprising several of Latin America's most influential economic policymakers, CGD senior fellow Liliana Rojas Suarez, and CGD president Nancy Birdsall suggests ways for the IDB to become more flexible and to step up its support for market oriented reforms. The IDB's new president, Luis Alberto Moreno, warmly endorsed the recommendations, calling them "a key agenda."
In an essay in November's LatinFinance magazine (subscription required), CGD Senior Fellow Liliana Rojas-Suarez questions how appropriate prudential financial regulation can be designed in Latin America to contain the risks from high external capital volatility. Her answer is that it can be done, but not with the current regulatory approach, which largely consists of efforts to directly control financial aggregates such as liquidity expansion and credit growth. Rojas-Suarez recommends an alternative "pricing-risks-right" approach that, she argues, can go a long way in limiting the adverse impact of high capital flow volatility on local financial markets.
According to Rojas-Suarez, traditional prudential regulatory policies cannot effectively contain the problems associated with capital flow volatility because they do not take adequate consideration of the particular risk features of financial sectors in Latin America. The reliance on capital adequacy rations, therefore, has not been effective. A better approach would be to create incentives for financial institutions in Latin America to "price right" the risks inherent to their assets. Such an approach might go a long way to mitigate the adverse effects from capital account volatility.
There are particular features that distinguish Latin America's financial markets, such as shallow financial intermediation with very small capital markets, the predominance of assets and liabilities with short maturity, and high volatility in key financial variables, including the deposit base. Rojas-Suarez argues these features reflect depositors' lack of confidence in domestic financial systems, which, in turn, makes these systems highly vulnerable to capital flow volatility.
A Two-Tiered Approach
For the least financially developed group of countries, where no capital standard works because basic conditions are not in place, the challenge is to identify and develop indicators of banking problems that reveal the true riskiness of banks. Countries such as Ecuador, Colombia, Venezuela and Nicaragua could benefit from an approach that encouraged the public offering of uninsured certificates of deposit, and that published inter-bank bid-and-offer rates to improve the flow of information of bank quality. Additionally, these countries should encourage the process of financial internationalization; market depth can only be achieved if a diverse group of investors and users of capital allow the market to become less concentrated.
For the second group of relatively more financially developed countries (such as Chile, and to a lesser extent, Brazil, Uruguay, Jamaica, Peru, Panama, and Trinidad and Tobago) the main recommendation is to design a capital standard that appropriately reflects the risk of banks' assets. There are two important policy recommendations for this group of countries. First, governments should adequately assess the risk features of their own liabilities when calculating capital requirements. Second, countries should develop risk-based regulations in loan-loss provisioning.
The historic 2002 United Nations Conference on Financing for Development in Monterrey, Mexico, overlooked a crucial question: regionalism. Financing Development: The Power of Regionalism is designed to correct this omission.
After more than a decade of financial sector liberalization, both of domestic markets and of international financial transactions (capital account liberalization), policymakers in many developing countries remain concerned about the effects that large and highly volatile capital flows have on their financial systems. However, in spite of the tremendous costs associated with the resolution of crises and signs of discontent among the population with the outcome of some reforms, to date there is no significant evidence indicating a reversal of the reform process. While one could advance a number of hypotheses explaining this "commitment to reforms," developing countries’ decisions and actions seem to indicate that policymakers perceive capital inflows as a necessary component to achieve growth and development.