AMERICAS CENTER 2007 ANNUAL RE VIE W

Transcription

1 AMERICAS CENTER 2007 ANNUAL RE VIE W

2 A NOTE FROM THE PRESIDENT When I came to the Atlanta Fed as its new president just over a year ago, one of the many aspects of the bank that attracted me was its Americas Center. I ve spent much of my career in global finance and management in such places as the Middle East and South America, so I valued the fact that the Americas Center provides a framework for working with partners throughout the hemisphere. Now that I ve seen firsthand the Americas Center in action over the past year, I m even more impressed with its vital work. The staff s noteworthy accomplishments during 2007, highlighted in this annual review, included supporting research on key economic and policy challenges through conferences on consumer banking, the political economy of international finance, and money laundering. The center s Web page continued to provide new research and publications, including the increasingly popular translations of original articles into Spanish and Portuguese. And the seminal research from our 2006 Lessons from Pension Reform in the Americas conference was published in an edited volume by Wharton s Pension Research Council and Oxford University Press. For 2008 and beyond, we look to build on the Americas Center s solid foundation laid over the past three years as we expand our activities related to key policy issues in an increasingly interconnected hemisphere. Dennis P. Lockhart April 2008

3 THE CENTER S PURPOSE The Americas Center, launched in 2005, is a cooperative undertaking among the Supervision and Regulation, Research, and Financial Services Divisions of the Federal Reserve Bank of Atlanta. As the economies of the Sixth Federal Reserve District continue to form closer ties with Latin America and the Caribbean region, the Federal Reserve Bank of Atlanta s relationships in the region have expanded as well. The center provides a framework for collaboration among bank staff whose responsibilities relate to the Americas and thus enables the bank to more efficiently integrate its resources to serve internal and external audiences through a wide variety of initiatives. These initiatives include sponsorship of policy conferences, analysis of key regional banking and economic trends in the area, exchange programs, technical assistance, and public outreach and educational activities. The course of global economic growth over the next generation or two is bright. Robert W. Fogel (from Lessons from Pension Reform in the Americas) 2

4 MILESTONES Although an annual review cannot capture all of our activities throughout the past year, it highlights our most significant projects, products, programs, and initiatives in These achievements demonstrate the cooperation by committed people from throughout our organization, often partnering with colleagues from a number of other institutions. We are pleased to provide a review of the major accomplishments during the Americas Center s third year. Highlights in 2007 include hosting three major conferences, presenting research advances at numerous forums in the region, and launching a new Web site. Products, Projects, and Programs The book Lessons from Pension Reform in the Americas, edited by Americas Center Coordinator Stephen Kay and Tapen Sinha, a professor at the Instituto Tecnológico Autónomo de México (ITAM), was published in December by Oxford University Press and the Pension Research Council of the Wharton School at the University of Pennsylvania. The edited volume includes presentations from a 2006 Atlanta Fed conference that was cosponsored by the Americas Center, ITAM, and the Pension Research Council. The foreword was written by Nobel laureate Robert W. Fogel. Part 1 features chapters on topics such as default options in defined contribution plans, gender issues, and the role of the World Bank. Chapters in part 2 focus on experiences with pension reform in the United States, Canada, Mexico, Brazil, Costa Rica, Peru, Uruguay, and Argentina. In March the Americas Center cosponsored the conference Consumer Banking in Latin America: Opportunities and Challenges, which was hosted by Florida International University (FIU) s Summit of the Americas Center in Miami. The conference focused on the development of consumer banking products and services for both the U.S. Hispanic community and Latin America, emphasizing consumer demand and banking the unbanked. Featured speakers were from FIU, the University of Miami, the Atlanta Fed, the Human Services Coalition, and private banks from several Latin American countries. 3

5 In February the Americas Center hosted the conference The Political Economy of International Finance. The event was cosponsored with Emory University s Halle Institute for Global Learning and the University of California at Los Angeles International Institute. Economists and political scientists from leading universities, the Atlanta and San Francisco Reserve Banks, and the International Monetary Fund discussed current research on such topics as the political economy of exchange rate arrangements and capital controls. The five conference papers were selected from more than forty submissions. Banking the Unbanked The social dislocation that sometimes accompanies technological change or opening of markets is a major and growing concern. One major challenge is banking the unbanked. Without a bank account, people are exposed to many hardships, and it s almost impossible to build wealth or fully participate in mainstream society, said Atlanta Fed First Vice President Patrick Barron at the Americas Center s conference Consumer Banking in Latin America Opportunities and Challenges in Miami in March. The forum focused on some of the most salient issues related to providing retail banking services in Latin America and to the Hispanic community in the United States. Hosted in conjunction with FIU s Summit of the Americas Center, the conference brought together senior management from Latin America s flagship banks, university scholars, nonprofit community organizations, and interagency regulators. At this one-day forum, panelists discussed the challenges of developing and distributing consumer banking products to Latin America s diverse population, the role of remittances, and the region s economic and political trends. A key challenge in Latin America s retail banking landscape, as cited by a conference panel of bankers, is income distribution. Panelists discussed the stark contrast between the region s upscale, highly banked consumers and the sizable unbanked population, which makes up more than 80 percent of the region s population. In the highly banked segment, mass product penetration includes the increasing use of sophisticated technology, such as the Internet, mobile phones, and chip cards, while the unbanked segment is gradually evolving but through a different business model, mostly via informal market players and retailers. Conference speakers identified the need for banks to use innovative multichannel distribution strategies to better position themselves to lead efforts to widen the retail base. For more information, see the events section of the Americas Center Web page at 4

6 Combating Money Laundering: Supervisory Perspectives from the Caribbean the Bahamas and the Cayman Islands was the theme of the Supervision and Regulation Division s August 2007 international outreach program in Miami. This event provided a forum for two distinguished banking supervisors from the Caribbean to openly discuss the progress made in addressing Bank Secrecy Act/Anti-Money Laundering (BSA/AML) issues. Speaking to an audience of representatives from U.S. regulatory agencies, the two panelists aimed to dispel the often negative popular image of their respective countries in the fight against money laundering and highlighted recent enhancements to legislation, suspicious activity reporting requirements, and bank examination programs. Inter-American Development Bank President Luis Alberto Moreno visited the bank in June and spoke about hemispheric trade at a luncheon hosted by Atlanta Fed President Dennis Lockhart. Atlanta Fed economists presented their research on Latin America at numerous conferences in the region, including the Latin America and Caribbean Economics Association meetings in Bogotá, at the Universidad Autónoma de México and ITAM in Mexico City, at Unicamp in São Paulo, at the Caribbean Monetary Studies conference in Belize, and at the central banks of Mexico and Argentina. In their paper What Can State Administrative Data Tell Us about the Undocumented Worker Labor Market? economists Julie Hotchkiss and Myriam Quispe-Agnoli found that the presence of undocumented workers in an industry has a statistically significant impact on wages, although the actual dollar amount is quite small. The Americas Center Web site, featuring research, publications, conferences, and resource links, received 33,529 page views in Original Atlanta Fed articles received 22,772 of those page views, of which 14,491 were translations into Spanish and Portuguese. As in 2006, a Portuguese translation of an article on China s economic growth was the most widely read EconSouth article online, receiving 5,654 page views. 5

7 The Americas Center hosted Mauro Alessandro, a Ph.D. candidate from the Massachusetts Institute of Technology, as its third annual graduate student dissertation intern. He spent eight weeks at the bank doing research, consulting with bank staff, and writing his dissertation on sovereign debt defaults and private credit. Outreach Initiatives Supervision and Regulation staff members contributed expertise and participated in nine foreign technical assistance training programs in several Latin American and Caribbean countries, including Brazil, Mexico, Peru, Puerto Rico, Aruba, and Trinidad. The programs focused on topics such as anti-money laundering, risk management and internal controls, operations risk, and bank analysis. As a part of the bank s responsibility to understand the home country environments in which foreign banking organizations (FBOs) in the Sixth Federal Reserve District operate, the bank s FBO analysis team visited four countries in 2007 Chile, Ecuador, Peru, and Costa Rica. During these visits, FBO team staff met with banking superintendents, central bank representatives, senior management of foreign banks resident in the Sixth District, and other officials in the fields of banking and finance in these countries. These meetings, an integral part of the Federal Reserve System s FBO supervision program, have become important in building closer working relationships with supervisors and bankers in the region and in making the Atlanta Fed a knowledge center for the Reserve System on Latin American banking trends. Members of the Americas Center Staff contributed their expertise at a number of conferences and engaged a wide variety of audiences on topics that included anti-money laundering, foreign banking organization country assessments, currency matters, remittances, and international payment systems. 6

8 New Financing Trends The conference Recent Financing Trends in Latin America: A Bumpy Ride Toward Stability, cohosted by the Americas Center and the Bank for International Settlements in May in Mexico City, explored emerging trends in Latin American financial markets and their policy implications. The keynote speakers were Barry Eichengreen, an economist at the University of California at Berkeley, and United Nations Under-Secretary José Antonio Ocampo. Approximately forty representatives from central banks and finance ministries attended. Participants examined changes in financing and the factors driving these changes. Specifically, the panelists raised questions regarding the benefits to sovereigns of issuing local currency, the pros and cons of doing so in domestic vis-à-vis international markets, the criteria for determining whether to issue domestically or cross-border, the status of private markets, the role of structured finance, and whether developing these markets remains a policy objective for de-dollarizing the region s economies. The panelists also focused on policy challenges of developing domestic bond markets, such as the advent of new instruments and investors and the scope for a regional market; the effect of new financial markets on the transmission of monetary policy; and the role that authorities play in developing these markets. For more information, see the events section of the Americas Center Web page at In April the Atlanta Community Affairs staff partnered with the Federal Deposit Insurance Corporation in facilitating a half-day session of the New Alliance Task Force Georgia, hosted by the Latin American Association, that highlighted topics related to banking immigrant populations. The task force is a collaboration of financial institutions, nonprofits, government agencies, the Mexican Consulate, and other parties who are seeking to improve access to the financial mainstream for recent Latino immigrants. Topics at the session included underwriting income tax identification number mortgages, mortgage insurance and the secondary market, the decision to offer an alternative mortgage product, and the impact of the Georgia Security/Immigration Compliance Act on the personal finance behavior of immigrant populations. Community Affairs staff in New Orleans, in partnerships with the Federal Reserve s Retail Payments Office, hosted a Directo a México workshop in January to familiarize Louisiana bankers with the program. Community Affairs staff is also working with LA Appleseed, the Hispanic Apostolate, and Puentes on delivering a financial education curriculum, banking services, and small business development to the area s growing population of recent immigrants. 7

9 Throughout the year, Miami staff met with officials from the central banks of the Bahamas, Colombia, El Salvador, Haiti, and Peru to discuss currency-related issues. A Supervision and Regulation staff member spoke about anti-money-laundering techniques at the joint Centre for Latin American Monetary Studies and the Financial Stability Institute s Anti- Money Laundering Seminar in Mexico City. Supervision and Regulation staff conducted presentations at the Caribbean Association of Independent Banks Conference in Guyana on The Changing U.S. Landscape and Its Impact on the Caribbean Financial Services Sector and The Evolving Face of the Banking and Caribbean Financial Services Sector: Challenges and Opportunities. International Financial Services The Retail Payments Office (RPO), a division of Federal Reserve Financial Services, carried out several initiatives in 2007 designed to promote more efficient cross-border payment options for financial institutions and their customers. Financial access is crucial in building a better life for individuals all over the world. With collaboration and support from the Mexican government, Directo a México has become the vehicle that introduces financial services to individuals living in the United States and Mexico, connecting communities on both sides of the border. Elizabeth McQuerry, RPO The RPO collaborated with the Banco de México, the Mexican development bank Bansefi, and the Institute of Mexicans Abroad throughout the year to develop and sponsor fairs to promote the Directo a México program in specific U.S.-Mexico remittances corridors, including St. Paul and Chicago. In an official ceremony in Jalpa, Mexico, on February 23, Mexico s President Felipe Calderón Hinojosa endorsed Directo a México as a solution to help reduce the costs of remittances, and he encouraged Mexicans to use it. Staff from the RPO and the Federal Reserve Board of Governors attended the event, which received extensive coverage from the Mexican media and featured a live transfer of funds from Mitchell Bank in Milwaukee using Directo a México. RPO staff made presentations on topics related to the cross-border automated clearinghouse (ACH) at several events, including two World Bank conferences and international payments 8

10 conferences in Brazil, Guatemala, and Mexico. The staff also conducted the first-ever Federal Reserve electronic survey of financial institution cross-border payments needs. RPO staff collaborated with NACHA (the Electronic Payments Association) and the U.S. Treasury s Office of Foreign Assets Control to achieve industrywide adoption of a revised ACH payment format to enhance regulatory compliance and to support future growth of international ACH. In collaboration with the Banco de México, the RPO launched the directoamexico.com Web site. The new site provides easy access to information on the program for both consumers and financial institutions. The RPO also launched a new promotional campaign, CanadaConnection SM, to promote the use of cross-border ACH payments to Canada. LOOKING AHEAD TO 2008 Looking forward, the Americas Center s aim will be to continue to support enhancing the quality of bank supervision in the region, to produce research on economic and financial developments, to provide forums to address financial and economic issues that affect immigrant populations, and to support evolving payment systems in the region. 9

11 STRUCTURE Americas Center Coordinator Stephen J. Kay Coordinator of Latin America Analysis Research Department Steering Committee Michael J. Chriszt Director, International and Regional Analysis Research Department Thomas J. Cunningham Vice President and Associate Director of Research Carolyn Healy Assistant Vice President International Banking Supervision James M. McKee Senior Vice President Retail Payments Office Robert Schenck Vice President International Banking Supervision Liaisons Nancy Jaimes Director Foreign Bank Analysis International Banking Supervision (Miami Branch) Sandy Juárez Financial Services Project Leader District Cash Function Office Financial Services Jessica LeVeen Farr Regional Community Development Manager Community Affairs (Nashville Branch) Hal Lipsey Senior Foreign Banking Organization Analyst International Banking Supervision Roxana Maneiro Senior Foreign Banking Organization Analyst International Banking Supervision (Miami Branch) Elizabeth McQuerry Assistant Vice President Retail Payments Office Federal Reserve Financial Services Robert de Zayas Assistant Vice President Branch Administration (Miami Branch) 10

12 Some Members of the Americas Center Staff Stephen J. Kay James M. McKee Michael J. Chriszt Elizabeth McQuerry Thomas J. Cunningham Elena Whisler, RPO Myriam Quispe-Agnoli, Research 11