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US SUB-PRIME MORTGAGE CRISIS HAS LIMITED REVERB ON LATIN MARKETS -
FUNDAMENTALS SOUND; STRONG GROWTH PROJECTED THROUGHOUT REGION

The recent crisis in US sub-prime mortgage instruments will have only a limited impact on Latin American financial services firms and their customers. The assets of banking and insurance related firms in Latin America are held mostly in local sovereign securities with some cross-border blue chip government, bank or corporate securities.

Latin American and Caribbean governments are also insulated from the credit crunch. In recent years, sovereigns have become more resilient by deepening domestic capital markets, effectively reducing their exposure to external capital.

LATIN AMERICA’S NEW DOWNSIDE RISK: COMPETITIVENESS

By shrinking government, professionalizing monetary policy, floating currencies and freeing capital markets, the money entering the region is staying put.

The eight of ten unfinished reforms in the original Washington Consensus represent the to-do list for Latin America if it is to raise its competitiveness and long term economic standard of living.