Promoting access to Peruvian capital market

(Lima, December 7, 2007).- "Development of the Capital Market" was the title of the seminar-workshop organized by the ministry of Economy and Finance (MEF) with the support of the Andean Development Corporation. The objective was to improve the government proposal on the reform in the sector.

The event - in which renowned national and international experts participated - was opened by Peruvian economy minister Luis Carranza Ugarte, and CAF Chief Economist Luis Miguel Castilla.

Emphasizing the importance of the reform, Castilla said that the capital market efficiently channeled disposable savings into long-term productive investment projects, maintained the competitiveness of the local business sector, developed new financial products and increased the range of assets in the market, and contributed to the dedollarization process.

CAF supports this event because it considers that the Capital Market Reform will develop the sector and promote more investments in the country, he added.

Minister Carranza said the purpose of the reform was to promote access to the capital market; strengthen debt instrument, derivative and mortgage markets; and develop a short-term yield curve as a benchmark to promote the development of derivatives and financial products in general. The reform will also lead to more efficient risk management in companies that operate in the financial system and the capital market, and relax the regulations on the investments of the private pension system, he added.

"The fundamental objective is to increase competitiveness in the market," the minister said. He thanked CAF for its cooperation in analyzing the matter and promoting debate among representatives of the main interested groups.

In the first block of the seminar Mario Blejer of the Bank of England gave a presentation on "The financial system in Latin America: trends and challenges," which was followed by "Experiences of capital market reforms in the countries of the region" by Matías Braun, professor of the University Adolfo Ibáñez of Chile; and Augusto Acosta, former Financial Superintendent of Colombia. In addition specific cases were presented on the markets of the region by analysts from Deutsche Bank, Citibank and Barclays.

Based on the international experiences described in the first part of the event, three workshops were held in parallel: (i) Investment policy of the AFPs; (ii) Development of the derivatives market; and (iii) Liquidity of the secondary market. Participants discussed a series of proposals aimed at improving the working of the Peruvian capital market, which were the basis for a later meeting between the ministry and the private sector.