Equality and multilateral financial cooperation in the Americas

Abstract

The paper explores the concepts of interpersonal, inter-firm, and interstate equality embedded in three contending visions for the evolution of international financial links within the Western Hemisphere. The free market- oriented regional financial project of the United States envisions extension of a NAFTA-like regulatory framework throughout the hemisphere. It promises Latin American citizens better financial services and their firms greater access to U.S. and Canadian loans and investment, in exchange for U.S.-style legal protections for foreign banks and (implicitly) for dramatically reduced financial policy space for Latin American governments. Venezuela’s vision of “Bolivarian” finance, exported to some of the circum-Caribbean and upper Andean region, promotes assertive state management vis-à-vis both foreign and domestic investors, populist redistribution, and increasing reliance on non- market financial transactions. It emphasizes equal credit access for poorer citizens and government retention of national financial policy space, but downplays the need for predictable financial regulation and property rights. Brazil’s regional financial project would unite South America through creation of continent-wide physical infrastructure and capitalist financial markets, while retaining an on-going role for public sector banks responsive to central government priorities. Brazil’s approach shares with the Venezuelan vision an emphasis on Latin American governments’ need for financial policy space, and with the U.S. vision a concern for regulatory predictability and financial deepening.