Latin American Capital Markets

DEVELOPING CAPITAL MARKETS-ETHICAL ISSUES 427levels require discrete attention.The regulatory framework for capital markets in LatinAmerica and the Caribbean requires strengthening at the macro level (better norms,better "normality"); a stronger legal framework would include the hardening of statutorypenalties for violators. At the meso level, corporate governance rules and therole and activities of professional associations would also have to be strengthened, sothat they do not limit themselves to intervening only in the most egregious violations.Finally, at the micro level, individual market actors, especially professional ones, mustbe made aware of their responsibilities to address the moral decisions related to honoringthe trust deposited in them by their communities when exercising their functions(Enderle 2002).These are.moral commitments at the individual, group, and collectivelevels, which require an overhaul of those practices, proclivities, and states ofmind that impede transparency, contestability, and concerted action.This is a tall orderindeed, but one that is amenable to education and training.Governments have towering responsibilities in the educational process ofbuilding intertemporal trust, especially by leading through virtuous example and rejectingthe pressure of interest groups that lobby for discriminatory measures, like theimposition of asymmetric foreign exchange, tax, and tariff regimes; the nationalizationof private sector debts; or the nonprosecution of the financially privileged.The exemplarypunishment of corporate and professional wrongdoers is part and parcel of thisagenda. Because consistency is the mortar of systemic confidence, governments inLatin America and the Caribbean must acknowledge their responsibility to lead theprocess of ethical awakening and enhanced ethical sensitivity, especially through therequirement for ethical training at all levels. In other words, finding a suitable, sustainablesocial path for ethical growth as part of capital market development should rankhigh among their primary responsibilities of providing the public good of intertemporaltrust.Another common problem that should be addressed and overcome is thedecontextualization of training in public ethics, which is generally limited to the hypotheticalexamination of ethical problems faced by individual actors, such as conflicts ofinterest, whistle-blowing, and deceit. It is essential to the success of public ethics trainingto add the context of the community on which ethical standards and modes of appliedlearning and teaching must be based. Engaged citizen participation and controlare at the root of successful initiatives of this sort (Sembor and Leighninger 1993)."1 ' As Sembor and Leighninger (1993, p. 175) vigorously advocate, "[The] vision of participatory, public ethics is not acode of conduct that must be continually rewritten to suit the times, or an infallible new method of oversight and enforcementMaking public administration compatible with ethics requires a more fundamental change. Democratic civicinstitutions produce a professional, political, and personal transformation that brings ethics back to its roots."Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub