Strengthening the Latin American Reserve Fund (FLAR) by expanding its size and scope in order to encompass a larger number of countries of the region would significantly contribute to financial stability as a regional and global public good. This paper seeks to cast light on the viability, implications and challenges of expanding FLAR to another five countries in the region: Argentina, Brazil, Chile, Mexico and Paraguay.
In our view, regional reserve funds are one of the mechanisms that contribute to a denser international financial architecture and help enhance its capacity to provide financial stability. Greater densification means not only that there is a wider range of tools, but also that there is greater interconnectivity between the institutions that make up the international financial architecture.