Backing for integration and development of Andean capital markets

(Caracas, May 26, 1995).— For its 25th anniversary, CAF jointly with the Latin American Institute of Social Studies (ILDIS has organized an international seminar on "Integration of Capital Markets in the Andean Region," to be held in CAF headquarters, Caracas, on June 12 and 13.

During the event, which also has the cooperation of the Caracas Stock Exchange, several proposals will be presented for developing national capital markets and adapting to the new climate of competitiveness and globalization prevailing on international markets. These proposals are the result of high-level research by a group of economists from Bolivia, Colombia, Ecuador, Peru and Venezuela, all CAF member countries, and respond to the institution's interest in backing issues which offer specific conclusions for promoting the sustainable development of its member countries.

In a press conference held today Caracas, CAF President & CEO Enrique García said there was a need to integrate national stock markets by harmonizing fiscal, monetary and exchange policies. This "will create advantages, which will considerably reduce individual vulnerability, reflected in times of crisis such as those experienced by Mexico where the volatility of international markets was evident."

He added that Latin America has a capital deficit for financing its sustainable development, which can be partly made up by foreign investment in these markets, once they have grown and modernized. "To do this, legal and regulatory measures need to be adopted which permit efficient supervision, along with an adequate policy for allocating and channeling the funds they manage into productive sectors, along with an institutional framework which includes the intermediaries (brokerage firms, brokers, insurance companies), modern communication technology and efficient channels for marketing securities."

Finally García said CAF was actively supporting the strengthening of these markets through equity participation in the formation of private pension funds (AFP Horizonte in Peru), privatization funds (also with Peru), investment funds to promote development of productive infrastructure (Scudder Fund and Fondelec, both multinationals), securities trading (BHN and Banco Mercantil in Bolivia, Corfivalle in Colombia), and lines of credit and commercial loans to qualified public and private financial institutions which in turn channel these funds into the productive sectors of the five member countries.

For Venezuela, CAF approved equity participation in a new private company Sistema Electrónico de Transacciones (SET), which will develop a new system of electronic securities transactions.