The globalisation of financial markets and financial regulation: implications for Latin America

Presentation by Mr Malcolm D Knight, General Manager of the BIS, to the Centro para la Estabilidad Financiera, Buenos Aires, 5 June 2007.

Abstract

Financial markets and systems worldwide have witnessed profound, mutually reinforcing changes in recent years, such as rising cross-border capital flows, the growth of derivatives markets, increased activity by hedge funds and private equity funds, and the increased correlations of equity prices and bond yields across countries. These changes are just beginning to have an impact on Latin America, which has seen a rise in private equity activity (from a very low base) and growing domestic bond markets. All of these developments point towards the importance of strengthening cooperation within the global community of central banks, financial regulators, and other authorities responsible for financial stability. This is a difficult and necessarily gradual task, but in recent years much progress has been made in developing common frameworks and approaches in many different areas, with contributions from the public and private sectors. The challenge going forward, as large emerging economies take a more prominent role in the system, is to ensure that the dialogue for developing norms and standards remains effective and inclusive. At the BIS, we have attempted to do this through a transparent, principles-based approach, and through broadening participation in BIS forums and governance.