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After the opening ceremony, IMF’s Managing Director, Rodrigo de Rato, highlighted the “transparency and efficient management” of the derivatives markets in Brazil:
“Derivatives may contribute considerably to risk management and diversification. Many countries in Latin America do not have derivatives markets, and in others, little depth and often crowded positions accentuate the risk of a sharp correction (…) Brazil has the largest derivatives markets in Latin America, and part of this success may be due to its transparency as well as to good administration. Brazil is unique among both emerging and mature market economies in having reporting requirements for over-the-counter derivatives markets. Consequently, broader information is available to supervisors than in other markets. The Brazilian experience shows that good data reporting and transparency are neither impossible nor prohibitively expensive in derivatives markets.”
In his speech, Mr. Rato underlined the importance of “solid” financial markets as an instrument of economic development, stating that the derivatives market has a fundamental role in contributing to the diversification of risk. In his opinion, Brazil is an “example” to Latin America in relation to derivatives markets, with its “transparency” and “efficient management” of derivatives.
For Mr. Rato, the current crisis in the U.S. subprime mortgage market is the “first real test of structured finance and related credit derivative markets, and of the complex instruments being traded in these markets.” Although he emphasized the advantages of derivatives, it is also a fact that their use cheapened and broadened the access to credit; Mr. Rato reminded that the crisis should be seen as an alert to the complacency with liquidity risks.
Although uncertainties remain, Mr. Rato stressed that the International Monetary Fund believes that the world economy will continue marching towards positive growth. IMF projections still point towards a global expansion of 5% for ’07 and ’08. For the U.S. economy, the IMF sees a limited impact of the crisis and maintains a growth projection of 2% for the GDP. For Mr. Rato, the emerging markets have solid foundations, having reduced the vulnerabilities of the past. In his opinion, the end of the “relative exuberance” of the credit markets will in beneficial to the economy. “The markets will adjust themselves”, he said. The recent problems can not be used as an argument against the importance of the financial markets as a stepping-stone to economic growth and prosperity.
After the IMF’s Managing Director’s speech, the President of Brazil’s Central Bank, Henrique Meirelles, made a brief statement. Mr. Meirelles reiterated that the Country’s current economic situation is a solid one – externally, fiscally, and inflation-wise. In Mr. Meirelles view, although Brazil is not immune to the current international crisis, it will show resistance to any eventual global economic retraction.
The lectures, debates and exhibits of the 3rd International Derivatives and Financial Markets Conference begin on Thursday, August 23rd.
Click here for Mr. Manoel Felix Cintra Neto’s speech (Portuguese only)
Click here for Mr. Rodrigo de Rato’s speech
Click here for Mr. Rodrigo de Rato’s speech in Spanish
Click here for IMF’s website
