|
|
Editorial Note Opportunities in times of crisis The crisis of the international financial system has started to give its first lessons, specially a simple one: history repeats itself. Therefore, it is necessary that, as solutions for the crisis are proposed, the actors of the financial system should understand their causes, incorporate their lessons and maintain a strong hold in continue strengthening and deepening the financial system. The origin and development of the current crisis are widely treated in this newsletter, and it is clear that the sovereignty of the market should be revised, taking into account the essential elements for its existence: a high degree of transparency, appropriate mechanisms of regulation and follow-up, an efficient consumer protection system and formal and clear conflict resolution means. It is worth to ask why did the chain of events that led to one of the financial crisis that with time, and given its collateral effects, will be remembered as one of the deepest ones in recent history, appeared. One answer to the latest question can point to the insufficient strength of the State as regulator and controller of the market in a moment in which the private sector, in search for attractive results in the short-term, did not paid attention to the risks it was assuming. Other factors that contributed to the crisis were the inadequate incentive system in place and the weakness of the support mechanism for decision making about complex financial products. The bonanza ended abruptly for both parts and again, given the losses of the private sector, the consequences of these for the financial system and the effects on the economy and the welfare of citizens, the State was once again called to search for solutions to the problems. In this context, it is necessary to evaluate if the region is prepared to face the challenges and to bear the costs that can derive from this crisis. Evidently, the dependence of several countries on the economic cycle of the United States, will inevitably affect their economies; therefore, in these cases, the State should implement actions that enhance the economy and that contribute to guarantee financial stability and a proper functioning of the payment system. Three topics are important to consider. First, the role of the State regarding financial intermediation; second, the capacity of financial operators in maintaining adequate levels of liquidity and enough capital, as a result of a better understanding of their environment and an effective management of risks and, third, the coordination among public and private entities to establish a more reliable and predictable operational framework for the financial system. The regulation and supervision capacity of the State should be evaluated, given that it was evident that it could not act in a timely way when markets entered in to processes that caused the current imbalances. Hence, it is essential to promote an institutional, regulatory and normative change, that can drive the markets to operate transparently and that is operated by entities that know and bear the full responsibility of the risk they assume. Managing risks and maintaining adequate levels of liquidity, with the goal of avoiding uncertainty regarding the solvency of financial operators, are key elements to assure the continuous and stable operation of financial markets. Therefore, it is necessary to watch that the financial industry, regulators and supervisors, in a joint effort, assure that the services and products offered in the market have clearly identified and delimited their sources of risk and that they have enough capital to absorb non In addition, financial intermediaries should be careful in the evaluation of their products and financial services, adopting a decision making framework were operations or services that generate doubt or whose risk cannot be evaluated in a clear way, either by absence of information o by the complexity of the proposals, be rejected. Finally, given the evident necessity of revising the current norms to strengthen the regulation and supervision capacity of the State and to increase the management capacity of the market, it will be necessary to continue the dialogue among public entities and among these and the private sector, searching to establish an operational framework were transparency, professionalism and a synergic relation with the consumer are the relevant topics of discussion. These are times of difficulties, but they are also times of learning and improving. It is a new opportunity to establish an adequate legal, normative and regulatory infrastructure that cautiously propels the permanent innovation of the financial market. It is also an opportunity for the private sector to strengthen its capacities and to revalue its practices with a medium and long-term vision, in which the consumer is above any other
consideration. |
|
|