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“Latin America is no exception regarding the adverse changes in emerging market conditions that have occurred since the US Fed began reducing Quantitative Easing (QE) in May 2013.” That’s the assessment of the Latin American Shadow Regulatory Committee (or CLAAF) in its latest statement.
Toward the end of the 2008 global economic crisis, the consensus was that developed economies would recover just as quickly as they did in past recessions. It was also expected that emerging market economies would continue acting as the world growth locomotive for a relatively long time. Until mid-2011, this perspective appeared to be in the process of materializing. By now, however, this scenario differs significantly from reality.
Recently the Latin American Shadow Financial Regulatory Committee (CLAAF), over which I preside, held its bi-annual meeting at CGD and issued its 24th statement. Among the CLAAF members that participated were several renowned economists, including Guillermo Calvo, Carmen Reinhart, Pablo Guidotti, Guillermo Ortiz and Roque Fernandez.
Aware of the crucial importance for Latin America of reaching a prompt and effective solution to the current financial problems in Argentina, this statement reflects the assessment and recommendations of the Latin American Shadow Financial Regulatory Committee (LASFRC) for moving towards that end. The statement has three parts. First, it identifies the major features and problems facing the Argentine banking system. Second, it assesses alternatives for crisis resolutions. Third, it advances on general lessons applicable to the region.