1. CEDI
Franco Moccia
April 2009

2. Road Map
Introduction and purpose
The crisis. Why? How long?
Regulatory Changes
How does this affect Latam?
Conclusion, Follow‐up

3. Introduction and Purpose
You are in a high pressure environment.
You need to adapt your business to the crisis.
You don’t have time.
You have more information than you can process.
I will give an overview about what’s going on, how it
affects the region and what I recommend to pay
attention to in this environment.

4. Crisis: Why? For how long?
Excess liquidity: too much for too long.
Technological change made regulations obsolete.
Over leverage.
Learning from the 30’s. 3 mistakes.
US can afford countercyclical measures.
Improvement by 2010 if there is no trade war and
China domestic market resists.

5. Regulations
Was the 90’s deregulation a mistake?
Capital markets, risk slicing, derivatives.
Regulations after the 30’s crisis. Divide and focus on
commercial banks.
New regulations coming? How would they be?
Regulations after 2008 and 09. Comprehensive
approach.
Technological change will continue. Limit leverage for
everybody and more self regulation.

6. How does this affect Latam?
Transmission channels: less exports (volume and
price), remittances, commodity prices and access to
international capital markets.
Latam is a commodity play. China drives
commodities.
Who can make countercyclical policies ?
6 indicators: Savings during the expansion/High
reserves/Strong local banking system/Deep local
capital markets/Access to international markets and
multilaterals/FDI attraction.

7. How does this affect Latam? Cont.
After the best 5 years in the region in decades we
reduced poverty from 40+% to 30+% (even with
several weak governments, thanks to the commodity
cycle).
I think that we will loose 50% of this improvement .
It will be different by countries and the difference will
come from their ability to implement countercyclical
policy effectively (6 points).

8. Conclusions and follow up
Track if the big 4 (US, EU, China and Japan) continue
to avoid the 3 mistakes from the 30’s.
US activity levels.
China domestic market and commodity prices.
Current account and sustainability of countercyclical
policies by country in Latam.
Have a business model sustainable in a continent
where more than 1/3 of the population is poor.