Safe and Sound Financial Systems: What Works for Latin America? (Inter-American Development Bank)

What can the Latin American countries do to both strengthen their domestic banking systems and reap the full benefits of integration into a global economy and liberalized international capital markets? The region's fragile financial systems have had difficulty adapting to the new environment ushered in by economic and financial reforms. Indeed, the recent surge of banking problems in the region compares in depth and coverage to that experienced in the pre-reform period of the early 1980s.

Safe and Sound Financial Systems: What Works for Latin America? explores alternatives available to policy makers to address three key policy issues:

• What is the most effective regulatory and supervisory framework for the region? An effective system must draw from the advantages of regulatory processes in industrial countries, but also take into account economic and financial features specific to Latin America.

• How should financial markets be structured?

• What is the most appropriate financial safety net for the region, including deposit insurance systems and lender of last resort facilities?