Antonio Reyes Gonzalez
Last April, the “UK and Latin America: Financing Prosperity” event, organized by Canning House, was held in London. Canning House is an important forum for exchange and understanding between the UK and Latin America. On this occasion, an interesting discussion took place on the development of economic sectors geared towards the future of the region. The event highlighted the importance of technology, green finance and infrastructure, compared to the usual topics related to natural resource extraction.
The common denominator throughout the history of the friendship between Latin America and the United Kingdom has been revolution. The United Kingdom supported the revolutions that led to the emergence of the independent Latin American republics. Therefore, it is natural for this relationship to extend to other revolutions, such as the digital revolution or the financial technology revolution.
George Canning was one of the most prominent British statesmen who supported the independence of the new republics in Latin America at the beginning of the nineteenth century. He held several senior ministerial positions and rose to the position of Prime Minister of the United Kingdom. Unfortunately, his tenure was short, as he died a few months after taking office, becoming the shortest-serving Prime Minister in British history, a record that stood until very recently.
In London, the celebration of George Canning’s legacy continues through Canning House, and his historic ties between Latin America and the United Kingdom. For example, the financial sector in London was particularly interested in financing development and prosperity in the region, with financial innovation methods. Interest in green finance is growing in Latin America, with countries such as Colombia, Mexico and Chile leading the way.
In Chile, for example, sovereign sustainability bonds were launched, becoming the first country in the world to issue sovereign debt of this type in local currency. The emissions are linked to Sustainability Performance Targets (SDGs) to reduce greenhouse gas emissions and ensure that half of electricity generation comes from non-conventional renewable energy (NCRE) sources in the coming years. This is a real innovation coming from Latin America, where financial institutions in London play the role of catalyst in designing and implementing these bonds.
The UK recently joined the Islamic Development Bank (IDB Invest), the private sector investment arm of the Inter-American Development Bank (IDB) Group, in a move aimed at strengthening the UK’s work to reduce poverty and address climate change in Latin America and the Caribbean by supporting small projects. and medium-sized companies.
In this context, in the past decade, IDB Invest has issued more than £5 billion of bonds on the London Stock Exchange, underscoring the strength of the partnership with the City of London and how financial networks allow it to receive projects from all over the world. Together to tackle one of the biggest challenges of our time: climate change.
Climate change and a just transition to zero emissions will be high on the agenda when the G20 meets under Brazil’s leadership later this year. The flow of green finance through London will be crucial to mobilizing resources where they are needed.
With a large, tech-savvy young population, and many people entering their careers without traditional bank accounts, fintech is booming across the region. Today, London is a leading global fintech hub. An ideal starting point for Latin American companies and startups seeking to expand globally. Take Brazil, home of the world’s largest digital bank: Nubank.
Over the past decade, financial technology has revolutionized the financial system in Latin America. The region constitutes fertile ground for this technology, and is the result of two main factors: the widespread use of smartphones; And a large number of residents who do not have bank accounts. Digital wallets are now almost as ubiquitous as smartphones, and open banking technology is expected to open the door to financial inclusion even further.
But we cannot talk about English investments in Latin America for financial innovation if parallel discussions are not held regarding the set of capabilities that allow people to participate in said transformation, such as (1) verifying identities digitally, (2) sending or receiving money securely, and (3) share personal information securely.
In the face of the challenges of any revolution, the participation of public institutions is important in this type of discussion about national projects and commitments to ensure that there are basic principles that guarantee the deployment of a digital, equitable and global public infrastructure, an important point that has generally been excluded from these discussions among actors in private sector.
As we face global challenges such as climate change, this financial cooperation between London and Latin America will be crucial to mobilizing resources towards a more sustainable future, bearing in mind the importance of inclusivity and governance as inherent elements of any development project.
Doctorate in Political Science from University College London (UCL), University of London. He currently works as an analyst at the United Nations Development Programme’s Human Development Office in New York. He is an affiliate member of the Mexican Council for International Affairs (COMEXI).
*The topics of discussion, as well as the opinions and conclusions presented in this article, are attributed solely to the author.
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