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24 / 09 / 2004
Experts meeting at the Forum call for more safeguards in financial systems in order to avoid collapses like those in Latin America

The creation of new transnational financial institutions such as the International Central Bank, regional banks like the central European one or "last resort moneylenders" are some of the formulas that have been thought up at the session "Recession, Financial Factors and Economic Collapse: a vision from Latin American economies” held today as part of the Dialogue “From the Washington Consensus to a A New Global Governance" today at the Forum. Del Economists Guillermo Calvo, Ernesto Talvi, John Williamson, Ricardo Hausmann and Xavier Vives attended.

Guillermo Calvo, one of today's speakers, called for international institutions to stop more economic crisis like the one in Argentina and pointed out the importance of the International Central Bank in order to “provide liquidity to a system in crisis." However, Calvo admitted to the existence of such an institution due to countries' sovereignty. Ernesto Talvi said that today few currencies-basically the dollar, the euro and the yen-circulate in international markets. He is in favor of regional banks similar to the European Central Bank although he recognizes that "we would have to see how it worked in crisis, something will happen sooner than later."

Catalan economist Xavier Vives, called for "last-resort moneylender" that would provide liquidity and lend money with "solid guarantees" in those countries in crisis that at the same time would solve "the lack of coordination among international investors in moments of crisis." Without making any concrete suggestion, Ricardo Hausmann and Juan Antonio Ocampo agreed with their colleagues. The first called for “more complete international markets and an international agenda, important for achieving the Barcelona Consensus." Ocampo, head economist of United Nations, called for “more ways of solving macroeconomic problems” and regrets “center-periphery asymmetry” in relation to currency used, the dollar, euro and yen, those of the "center of the world" marginalizing currencies from developing countries.

The session concentrated on the Latin American crisis of the late nineties. Hausmann said that, “if we understand how they grow, we can understand how we arrived to the crisis." In the case of Argentina, he blamed the fact that they "used up all the funds", that were "terrible and misinformed" investments made in "badly regulated" financial systems. According to Hausman, the flow of international capital does not stabilize national economies and he suggested "saving during good times in order to confront moments of crisis."

John Williamson attributed the “abrupt stop” of Latin American economies to the "propagation of the Russian crisis of '96 through moneylenders" and said Latin America is very vulnerable due to its huge external debt. “Latin America does not have to accept the situation” and he suggested that he governments issue bonds on the national market that replace loans from abroad as well as fiscal practices that favor loans in national currencies.