UK-Latin American Finance Conference

Possibilities and landscapes for growth

The first panel of the afternoon investigated the synergies between the UK and Latin American markets, and the prospects for mutual growth.

Panellists recognised the significant financial challenges in Latin America. There is a pressing need for social finance to address the stark inequality and lack of financial access, as one panellist highlighted, close to half of all adults in Mexico do not have a bank account, with that number falling to 20% within Latin America. Yet, with an increasing number of Latin Americans getting access to mobile phones and the internet this landscape is set to change drastically.

This change will significantly impact the lives of much of the region’s population and simultaneously bring a plethora of opportunities for those involved in digital banking and fintech. In fact, one speaker insisted that the Latin American fintech scene is so vibrant it should serve as a lesson for the UK and Europe, particularly when it comes to online payments.

At the same time, fintech innovations could have encouraging environmental applications: the representative of Coinbase explained that natural assets can be tokenised, put on blockchain, and fractionalised, allowing a greater number of people to invest in green finance. This technique could encourage conservation through remuneration of those involved. Another panellist highlighted the potential of debt for nature swaps; these are arrangements whereby a government issues bonds whose interest rates are tied to climate commitments, if the government does not meet their commitment, they are obligated to pay more.

This panel touched upon the advantageous institutional conditions that exist in the UK and Latin America. London already has a mature landscape that accepts sustainable bonds, such as those issued by the Mexican Government and enabled by the IDB. At the same time, the London Metals Exchange is a perfect financial institution for the extractive industries operating in Latin America. Panellists praised the UK government for being business-friendly, particularly in the arena of social finance: promoting inclusion of women and under-represented groups in financial arenas. Simultaneously, governments in Latin America are growing more friendly to cutting-edge financial services. Mexico serves as a fitting case, having recently revised their fintech laws, allowing households greater access to finance. These developments can help reach the unbanked and empower micro-entrepreneurs. 

London’s role as a financial hub

The Lord Mayor of London gave a speech in which he called the professional services of London to action. He pointed out that in this moment of global turmoil London can seize the initiative to be the home of stable and prosperous business, the centre of Latin American government bonds, green finance, and net zero innovations. He urged listeners to be less risk averse, to get out into the world to pursue business opportunities. He closed by calling for a greater community within the City of London.

Innovations and new financial opportunities

The second panel of the day considered opportunities in export finance and local currency funding. Trust was one of the key themes of the discussion: consumers and business rely on reliable legal frameworks and predictability. Panellists argued that governments in the region must strike a balance between providing institutional stability and enough breathing room to allow innovation. This stability is key to building the trust needed for growth.

Participants discussed the state of local currency funding. It is clear that since 2012 the US dollar has become more attractive for investors than local currencies. Furthermore, there are difficulties for larger companies in the region when trying to move money around and out of the region. However, Latin America has a high demand for foreign exchange that could be met by digital currencies. This is particularly true in economies such as Bolivia who, despite having dollarized currencies, are struggling to get US dollars. These new markets will be difficult to build but offer abundant opportunities for new technologies.

There are ample opportunities for new forms of financing to arise in the region. Although many in Latin America remain unfamiliar with the diversity of financing tools and techniques, this will inevitably change over time, opening up the region to further business.

The day concluded with a networking reception where attendees discussed the key thoughts of the day: the potential of digital finance, the enormous and growing market in the region, and solutions to challenges on the horizon.

Canning House is grateful to all participants and speakers for their contributions to another successful UK-Latin American Finance Conference.