Central America : Structural Foundations for Regional Financial Integration

This book was prepared as part of the Central America Financial Sector Regional Project (FSRP). The countries covered in the FSRP comprise the six Spanish-speaking countries of Central America: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Although relatively small, they are large as a group and confront many common policy challenges. With about 40 million people, Central America's population is as large as Spain's or Argentina's. Besides geographic proximity and a common language, the region shares a dependence on raw material exports, close economic ties to the United States, and vulnerabilities to natural disasters and terms-of-trade shocks. Several of the countries have also suffered from long periods of civil strife, which slowed economic growth generally, and hampered the development of legal and judicial systems. The chapters cover: an overview of the principal issues and findings of the project; background on financial development and soundness in the six countries; trends in regional financial integration and supervisory responses; development of the insurance sector; development of payment and securities settlement arrangements; and worker remittances.