Lot of attention on financial innovation

Regulation, surveillance, and supervision of the financial systems in Central America and the Dominican Republic.

Tuesday, February 3, 2009

International financial innovation has become one of the factors behind the current global financial crisis. According to estimates, almost 78% of global liquidity is concentrated in derivative instruments , which have come to represent at least 94% of the global GDP. On the other hand, high powered money, only 1% of global liquidity, constitutes 9% approximately (11% and 28.4% respectively for the Central American region and the Dominican Republic in 2006).

The above illustrates the high level of leverage that is possible in financial markets at the global level and even though it is not comparable with regional levels, the observation is not irrelevant, especially if the probability that a payment system exists in the region that is not subject to surveillance or supervision and for which there is a wide range of financial services being offered in addition to loans and deposits...

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