1. First Meeting of the IDB Euro-Latin Research Network Federico Sturzenegger Business School, Universidad Torcuato Di Tella Madrid, October 2002

2. Substantial room for synergies... Many countries in Europe have jumped from emerging to developed Macroeconomic problems are parallel (trade integration, Europe 92) There is mutual interest in providing solution to common problems

3. Some issues with common experience... How to achieve macroeconomic credibility (and credibility at large) will remain central –Role of institutions –Tradeoff between flexibility and credibility –Dollarization –Fixed exchange rate regimes After 92 Europe tightened grip on exchange rates But rules for accession to EMU require a flex Today Latin America is moving away from fixes Flex adjusts via reducing wages: is this what we want?

4. Determinants of exchange rate regimes..

5. More issues with common experience... Capital and current accounts –Sudden stops Europe had them through 92 –Are capital flows good or bad? –Contagion –Currency crises 1st, 2nd and 3rd generation models –Balance sheet effects Going beyond the basics How to develop a local currency market

6. Some issues with common interest... Banking regulation –Banking competition –International lender of last resort –Repos as insurance mechanisms –Narrow Banking –Restriction on asset composition

7. More issues with common interest... Debt policy –What is sustainability? –Debt and growth –More flexible debt Indexed to domestic price levels Indexed to commodity prices Role of IFIs Shareholding vs. Debt –Debt restructuring Moral Hazard –Does it exist? –International Financial Architecture –Reverse moral hazard –PSI and exchange rates

8. More issues with common interest... Fiscal Federalism Corporate governance and the development of local capital markets Patterns of FDI Inflation and Inflation targetting Monetary policy General institutions improvement and its political economy