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make thirty year loans in Brazilian reais or Indonesian rupiah. But if democratic capital markets
are the key to successful globalization - and I think that they are - then this gives a focus to
efforts to reform international financial architecture.
This where the real policy work comes in - and this is where the President can and should start to
mobilize the intellectual and professional resources to make long term lending in emerging
markets economically feasible and financially sound. A chief aim of international financial
architecture reform should be to reduce long term currency risk in emerging markets as part of a
broader program of building democratic capital markets. This suggests that the United States
should actively support countries who want to consider options like currency boards. It also
suggests that the US should begin to consult with the World Bank and the IMF about ways in
which international financial institutions could support dollarization. If the resources, for
example, that are now held in reserve to deal with currency crises were made available to help
dollarized countries deal with exogenous shocks (like Fed interest rate hikes linked to US
domestic conditions), then many of the problems of dollarization could be ameliorated or solved.
Other possibilities to explore include the creation of regional institutions for dollarizing and
currency board countries, even regional central banks that provide liquidity, act as lenders of last
resort. supervise banks and set up institutions comparable to Fannie Mae and Freddie Mac. I
have been looking at some of these ideas in the Council and would be happy to elaborate further.
III. A Regional Agenda
Meanwhile. the process of regional economic integration has also bogged down. While Mexico
is fortunately sharing in the US prosperity, aided by high oil prices at the moment, NAFTA's
unpopularity and the slowing of progress toward FTAA are less encouraging. Given the
volatility in Venezuela and Colombia, the uncertainty over the future of Cuba, and the general
mix of regional problems (immigration, unemployment, narco-trafficking, etc.) the President
needs to find a way to begin to foster the consensus for regional engagement that the US will
need in the future.
The capital market proposals made above would have a positive impact both on the economies in
the region and, by stressing the shift away from export dependency as the most prominent feature
of their growth strategies, on the political climate in the United States.
But there are a couple of additional initiatives that the President could put on the table that
would have a vast, transformative impact on the region - and on the US political debate about
regional policy.
A Regional Retirement Initiative - a program to encourage and facilitate retirement by US
citizens in neighboring countries - would transform the development prospects of our nearest
neighbors, expand the range of options and enhance the lifestyles of retiring Americans
(especially those with limited savings), and reduce the cost of health programs for the elderly.
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"ocrText": "make thirty year loans in Brazilian reais or Indonesian rupiah. But if democratic capital markets\nare the key to successful globalization - and I think that they are - then this gives a focus to\nefforts to reform international financial architecture.\nThis where the real policy work comes in - and this is where the President can and should start to\nmobilize the intellectual and professional resources to make long term lending in emerging\nmarkets economically feasible and financially sound. A chief aim of international financial\narchitecture reform should be to reduce long term currency risk in emerging markets as part of a\nbroader program of building democratic capital markets. This suggests that the United States\nshould actively support countries who want to consider options like currency boards. It also\nsuggests that the US should begin to consult with the World Bank and the IMF about ways in\nwhich international financial institutions could support dollarization. If the resources, for\nexample, that are now held in reserve to deal with currency crises were made available to help\ndollarized countries deal with exogenous shocks (like Fed interest rate hikes linked to US\ndomestic conditions), then many of the problems of dollarization could be ameliorated or solved.\nOther possibilities to explore include the creation of regional institutions for dollarizing and\ncurrency board countries, even regional central banks that provide liquidity, act as lenders of last\nresort. supervise banks and set up institutions comparable to Fannie Mae and Freddie Mac. I\nhave been looking at some of these ideas in the Council and would be happy to elaborate further.\nIII. A Regional Agenda\nMeanwhile. the process of regional economic integration has also bogged down. While Mexico\nis fortunately sharing in the US prosperity, aided by high oil prices at the moment, NAFTA's\nunpopularity and the slowing of progress toward FTAA are less encouraging. Given the\nvolatility in Venezuela and Colombia, the uncertainty over the future of Cuba, and the general\nmix of regional problems (immigration, unemployment, narco-trafficking, etc.) the President\nneeds to find a way to begin to foster the consensus for regional engagement that the US will\nneed in the future.\nThe capital market proposals made above would have a positive impact both on the economies in\nthe region and, by stressing the shift away from export dependency as the most prominent feature\nof their growth strategies, on the political climate in the United States.\nBut there are a couple of additional initiatives that the President could put on the table that\nwould have a vast, transformative impact on the region - and on the US political debate about\nregional policy.\nA Regional Retirement Initiative - a program to encourage and facilitate retirement by US\ncitizens in neighboring countries - would transform the development prospects of our nearest\nneighbors, expand the range of options and enhance the lifestyles of retiring Americans\n(especially those with limited savings), and reduce the cost of health programs for the elderly."
}