Inflation and government deficits have been reduced, monetary growth is under better control, and the external debt as a percentage of both GDP and exports earnings has fallen. As the financial markets of the region have become increasingly liberalized, the countries have been able to attract increasing amounts of direct as well as portfolio investment from international investors. By 1995, the economies had solidified to the point that the crisis suffered by the Mexican economy, though resulting in a temporary strain on some countries, did not spread. Likewise, the impact of the current Asian crisis to date has been limited. The reforms undertaken by most of the countries in the region are recognized as being substantive and lasting.
Financial reform is, above all, a continual process.
The initial reforms undertaken in the last decade need to be consolidated and extended so that more sophisticated markets, institutions and instruments will develop. The countries of Latin America and the Caribbean need to take steps to move away from their reliance on bank-dominated systems. Undoubtedly, commercial banks will continue to play a central role in financial markets, facilitating credit, savings and payments services, but their product offerings will likely be insufficient for the investment and risk transfer needs of the vibrant, growing economies of the region. Banks that depend on par deposits are unable to underwrite or invest in equities. Nor can banks be expected to undertake foreign exchange, interest rate or commodity price risk on behalf of their borrowers when they are unable to hedge these risks.