OPENING REMARKS OF MR. JAVIER GUZMAN CALAFELL, DIRECTOR GENERAL OF THE CENTER FOR LATIN AMERICAN MONETARY STUDIES, AT THE BANK OF JAPAN-CEMLA SEMINAR ON REGIONAL FINANCIAL COOPERATION, TOKYO, JAPAN, OCTOBER 11, 2012.

Good Morning,

First of all I would like to thank the Bank of Japan, and very specially Mr.

Kiyohiko Nishimura, for giving CEMLA the opportunity to co-organize this

event.

Let me note as a background that CEMLA, the Center for Latin American

Monetary Studies, is the association of central banks from Latin America

and de Caribbean, although our membership of 53 institutions includes

most of the central banks from advanced economies, as well as other

financial organizations.

This Seminar represents another step in the efforts to get a closer

collaboration among central banks in Asia, Latin America and the

Caribbean, that with the support of CEMLA began several years ago. In

fact, the governors of the central banks of these regions have been meeting

annually since 2006, to exchange views and to learn from each other, as

well as to foster closer contacts and mutual understanding.

The positive experience with these meetings has led to the search for

means to enhance even further cooperation among the central banks of the

two regions. In this context, in 2010 governors decided to promote a

 

 

number of initiatives that include the joint organization of events, the

creation of new communication channels, the preparation of joint studies,

and internship and technical assistance programs, among other measures.

CEMLA has been working closely with SEACEN and several Asian central

banks to implement these proposals.

The topic that will be discussed today is of particular relevance for CEMLA,

since the main objective of the Center is precisely to foster cooperation

among central banks in Latin America and the Caribbean, through a better

understanding of monetary and financial issues in the region. But beyond

this, discussion of this topic is in my view crucial in the current juncture.

Why is this the case?

To start with, the relevance of regional cooperation has increased as a

result of globalization. Financial and economic globalization have resulted in

numerous benefits for the world economy, but at the same time have been

accompanied by new challenges. In particular, the transmission of shocks

from one economy to another has become faster and far more pronounced.

This has accentuated the vulnerability of individual economies to external

factors, and the need for cooperative responses at the regional level.

Regional financial cooperation has received an additional boost from at

least three more forces: the increasing integration of trade and financial

flows in some regions; the geographical nature of economic contagion; and

a sense of unease with the capacity of global financial institutions to

 

 

guarantee regions´ prosperity, and with the reliability of international

institutions in which emerging market and developing economies feel to

have insufficient influence.

Furthermore, regional financial cooperation is also important for political

reasons. It can be key to defend regional interests in international

institutions and to enhance these countries´ status in the international

community. Also, it gives their members an opportunity to alternate or

resolve their political differences.

Of course, the creation of efficient mechanisms for regional financial

cooperation faces numerous challenges. Let me refer briefly to three of

them. First, regional economies are diverse and heterogeneous in terms of

per capita incomes, stage of economic development, institutional capacity,

and economic systems and structures. Such diversity and heterogeneity

create obvious difficulties for financial cooperation. Second, experience

shows that a strong political will is essential for regional financial

cooperation to succeed. Indeed, consensus on a common long term goal

among member countries will strengthen the driving force to achieve that

goal. Third, the success of regional financial cooperation will require a

supportive institutional structure. Even with a strong political push for

cooperation, this might imply financial resources and expertise beyond the

capacity of many emerging market and developing economies.

 

 

The experiences of Asia, Latin America and the Caribbean provide us with

outstanding lessons on the relevance of and challenges related to regional

financial cooperation. On the one hand, Latin America and the Caribbean

have the longest history of regional integration efforts in the developing

world. These integration processes were also the context in which different

forms of regional financial cooperation were born. On the other hand,

although more recent, the efforts of financial cooperation in Asia have

shown an impressive progress after the 1997-98 crisis, with a field of action

that encompasses a financial safety net, macroeconomic surveillance and

capacity building.

To discuss a number of issues related to regional financial cooperation and

the experiences of Asia and Latin America, we have assembled today a

very diverse, talented and experienced panel of experts. We will thus have

the privilege to listen to the points of view of three distinguished central

bankers from these regions, a high level official of one of the most important

global financial institutions, and the director general of one of the key

components of the institutional structure for financial cooperation in Asia.