Escrivá: Trust is central amid geopolitics and tech shifts

Governor Escrivá highlighted two major forces reshaping the global environment: a transforming geoeconomic order and profound technological shifts.

He noted a gradual move from multilateral cooperation towards economic and financial tools being used as instruments of pressure.

Geoeconomic measures, like tariffs, primarily impact financial markets by changing asset values and prompting capital movement, affecting exchange rates and financial stability.

Their effectiveness scales with control over critical 'choke points' in finance, technology, and inputs.

Simultaneously, an unprecedented wave of technological change, including artificial intelligence, redefines economies and brings new risks to financial infrastructure and cybersecurity.

In this evolving landscape, central banks provide the valuable public good of trust, crucial for navigating uncertainty.

Latin America has shown increased resilience over the past two decades, with stronger monetary policy frameworks, matured inflation targeting, and flexible exchange rates enabling better navigation of global shocks.

However, Escrivá warned against complacency, as monetary policy alone cannot address challenges like supply shocks.

The region's growth remains modest due to structural constraints and weak productivity.

Changing global capital flows, driven by non-bank intermediaries and digital channels, are more price-sensitive and prone to sudden reversals.

This necessitates greater reliance on fiscal policy, structural reforms, and robust macro-financial frameworks to attract high-quality, long-term capital and foster durable growth.