The president of the Inter-American Development Bank (IDB), Mauricio Claver-Carone, affirmed that fintech is “the most efficient and effective mechanism” to fight informality in Latin America and the Caribbean.

In a region where less than 50 % of the population is banked, the rise of the digital financial sector may represent a new formalization mechanism in the market, according to Claver-Carone.

“Today we have a mechanism to combat informality and it is called digitization. Fintech is changing the landscape of the region and it is the most efficient and effective mechanism we have to fight informality,” Claver-Carone said.

The IDB president explained that the difference between the winners and losers of the pandemic lies in digital connectivity. “The winners and losers of the pandemic were those who had connectivity and those who did not”, he said.

According to the president of the multilateral bank, the passage of the virus through the region led to a greater awareness of the importance of digitization, which has at the same time generated a before and after in financial innovation.

Almost 35 % of all investments in fintech globally, more than a third of the total, is made in the region, which has seen the growth of neobanks such as Nubank, Ebanx or Ualá, among others.

Source: dpa

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The Organization for Economic Cooperation and Development (OECD) warned that the crisis generated by the pandemic will cause strong increases in labor informality, inequality and poverty in several Latin American countries, so the governments of the region should focus its policies in developing strong social security systems and policies to curb informality.

This was indicated by the agency in its latest report, where it highlights that after a “devastating” 2020 due to the health crisis, future prospects are improving, noting that the response of governments from now on must address the structural obstacles to economic growth.

In this scenario, the Paris-based institution made a series of recommendations that have analyzed the situations in Argentina, Brazil and other countries, also citing several aspects in fiscal, educational, labor or social matters.

OECD Council recommendations

The OECD mentions in its report the little economic integration of Argentina in the world economy when compared to other emerging countries, a situation that has worsened with the impact of the health contingency.

Thus, the agency considers it relevant to reduce regulatory and tariff controls by the authorities, which would generate new opportunities for both citizens and companies.

In the case of Brazil, the agency highlighted the need for the country to reactivate its economic activity after the pandemic, in addition to focusing protection programs on the most vulnerable sectors of the population.

The Organization’s recommendations include changing the focus of social spending to benefit those most in need in order to reduce levels of inequality and poverty.

K. Tovar

Source: Notiamerica

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