The financial integration of Latin America and the Caribbean has been a goal pursued for decades by the countries in the region. The idea behind this integration is to promote economic development and strengthen financial stability through cooperation and coordination among Latin American countries. The current currency hierarchy places a national currency, the US dollar, as the international reserve currency, while the currencies of underdeveloped countries are considered non-convertible. Therefore, bilateral trade relations are affected by monetary policy decisions of a third country, naturally affected by domestic issues. Thus, the quest for more regional monetary integration could enhance resilience to international shocks and boost trade and investment in these countries. A payment clearing system would make some headway in expanding sovereignty and strengthening these countries’ governance over their own socio-economic development, reducing the constraints imposed by the volatility of the international financial market.

In line with the theme related to the promotion of international trade in the independent region through new financial mechanisms, which was addressed in the context of the XX CLAD congress held in Havana, Cuba, in 2023, we continue our efforts to promote learning and debate spaces in the international context, in which doors can be opened to create regional policies oriented to this issue.

In this regard, we believe that alternative financial tools for international trade are crucial for a number of reasons. These alternatives can improve the resilience, fairness and efficiency of global trade, ensuring that countries and companies do not rely too heavily on any one system or currency.

Reliance on a single financial system, such as that dominated by the US dollar, exposes countries and firms to significant risks. If a currency or financial tool experiences instability, countries that rely heavily on it may face economic turbulence. Alternative financial tools, such as digital currencies or facilitated trade in other currencies (e.g. the euro, the yuan or regional currencies), help mitigate these risks and provide flexibility to manage economic shocks.

Similarly, many countries face challenges when their trade depends heavily on financial systems controlled by specific nations or geopolitical blocs. Sanctions, political tensions or unilateral decisions can severely affect their ability to conduct business. Alternatives provide more autonomy, allowing countries to maintain trade relations even in the face of conflict or geopolitical constraints.

For many developing countries, access to global financial markets can be costly and limited. Having alternative financial tools, such as regional clearing houses or specific trading mechanisms, allows these countries to participate in global trade on more equitable terms, without facing prohibitive tariffs or currency instability imposed by global financial systems.

In addition, currencies such as the US dollar, euro and others can experience fluctuations based on global market conditions, which can affect trade prices and economic stability in other regions. Alternative financial tools, including cryptocurrencies, special drawing rights (SDRs) or bilateral trade agreements using local currencies, help protect countries from the impact of such currency volatility.

In this regard, global economic crises, such as the 2008 financial crisis or pandemic shocks, expose vulnerabilities in the global financial system. Alternative financial tools, such as digital currencies or regional payment networks, provide a buffer against external shocks and help countries maintain trade flows in times of global instability.
Furthermore, it should be considered that, in many cases, alternative financial tools (such as blockchain-based systems or regional financial arrangements) can reduce the cost of international transactions by decreasing reliance on traditional banking systems. Digital currencies and decentralised payment systems, for example, can eliminate intermediation fees and lessen the complexity of currency conversions, making trade more efficient and cost-effective.

Alternative financial tools, on the other hand, allow for stronger regional cooperation by encouraging trade in local or regional currencies rather than relying solely on dominant global currencies. This can boost trade between developing countries or neighbouring nations, fostering South-South cooperation and reducing external reliance.

Another aspect to consider is that new financial tools, in particular digital platforms and decentralised finance (DeFi), can expand access to international trade for smaller firms and countries with limited access to the global financial system. These alternatives democratise financial access, facilitating the participation of small businesses, emerging markets and underserved regions in international trade.

Innovative financial tools, such as blockchain-based systems, offer the possibility of faster, more transparent and secure transactions. These systems can provide real-time payment verification, reduce the risk of fraud and streamline business processes. The introduction of alternative tools also fosters competition and innovation in the financial sector, leading to more efficient business solutions.

Importantly, a multipolar financial system, where multiple currencies and financial tools coexist, helps decentralise global economic power. This prevents any single country or group of countries from exerting disproportionate influence over global trade flows, promoting a more balanced and fairer global economic order.

In summary, the availability of alternative financial tools in international trade is essential to reduce risks, improve global equity and promote economic resilience. These alternatives not only provide countries with more autonomy and flexibility in global trade, but also foster innovation and financial inclusion. By diversifying financial systems, the global economy can become more stable, transparent and accessible to all participants.

• To explore and exchange regional and extra-regional experiences on different proposals or alternatives to make independent international trade viable on initiatives aimed at facilitating trade transactions by implementing alternative financial mechanisms in international trade.
• To determine, through best practices, the feasibility, benefits and advantages of alternative payment mechanisms.
• To discuss the need for and the importance of establishing new financial mechanisms for strengthening intra-regional trade.

Public organisations involved in the execution of international transactions, as well as academia and the public sector, whose objective or activities are aimed at the promotion of export sectors.

Within the framework of the XXIX International Congress on State Reform and Public Administration Latin American Center for Administration for Development (CLAD)

Date: 27 November 2024
Time: 13:00
Modality: In person.
Venue: Brasilia, Brazil
Languages: Portuguese, Spanish and English (simultaneous interpretation).