Financial Integration in the Pacific Alliance
This paper discusses financial integration issues in the Pacific Alliance. The Alliance seeks to attain free circulation of goods, services, capital and workers among its members (presently Chile, Colombia, Mexico and Peru) and strengthen their cooperation in several areas. Since it started, in 2011, it has made important advances with respect to these goals. We show here that there is already significant de facto financial integration, a considerable degree of harmonization of financial regulations and cooperation in supervision, and a bold attempt to partially integrate the four stock markets through MILA, though actual transactions through this mechanism still remain marginal. The paper concludes that there are potentially large short term and long term benefits for member countries in further integration of financial markets, especially of capital markets. After examining remaining challenges, it proposes an Agenda for Action for regulators that could eventually lead to full capital markets integration through a single stock market.