Latin American Capital Markets

332 CLEMENTE DELVALLEveloping the market, setting higher information standards, implementing more transparentpractices, increasing the liquidity of secondary markets, expanding the investorbase, strengthening government debt management, promoting competition amongmarket participants, and implementing a monetary policy conducive to money marketdevelopmentThe region's bond markets are seriously threatened. Argentina has defaulted itsdebt, producing the highest default in the history of the world. Brazil's governmentbonds are facing higher spreads over U.S. treasury bonds, and most of its debt is indexedto the dollar or the overnight rate, revealing a great market risk to investors. Colombiahas done well in achieving its goals in recent years, but its constant fiscal deficits couldcomplicate debt management and cause permanent damage to the progress. Chile hasa relatively sound position, but the turbulence in South America affects the country andits capital marketThe regional crises have not yet affected Mexico, but as emerging marketsare perceived as one asset class, the country has to reinforce its commitment tosound market practices and consolidation of the market development processThe restof the countries face similar or more complicated problems and must explore alternativesfor market development, including regional solutions.The process of bond market development requires a long-term view and afirm commitment to market practices, especially during the first stages when governmentsare usually tempted to return to old behavior Policymakers have to be fullyconvinced that the benefits of their efforts are much higher than the costs and thatmarket development will positively affect the entire economy.BibliographyBank for International Settlements (BIS). 1996. Changing Financial Systems in SmallOpen Economies. Policy Paper I. Basle, Switzerland.. Statistical Tables on Securities. Available at www.bis.org.Economic Commission for Latin America and the Caribbean (ECLAC). 2001. StatisticalYearbook for Latin America and the Caribbean. Available at www.cepal.org.Iberoamerican Federation of Stock Exchanges (FIABV). 2000. Statistical Summary. Availableat www.fiabv.org.. 2000 Statistics. Available at www.world-exchanges.org.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pubRodriguez, Gerardo. 2001. Development of the Domestic Debt Market in Mexico. WorldBank Regional Government Bond Market Workshop. Rio de Janeiro (June I I).