Market turmoil has already spread like a cancer from New York to Berlin. All over the world, the zeitgeist is turning against the markets, prefiguring a cyclical return to regulation. Luis Alberto Moreno, the Colombian president of the Inter-American Development Bank, has seen this before. He has been an asset manager, an ambassador to Washington, and a minister of Finance. Moreno chatted with NEWSWEEK's Adam B. Kushner about what comes next, and which kinds of countries are most and least exposed. Excerpts:

KUSHNER: Fed chairman Ben Bernanke says "a recession is possible." How would it spread across the world, and would it touch Latin America?
MORENO: First, let's just recognize a fact of life: if you have a recession in the biggest economy in the world, the likelihood of spreading elsewhere is high. People used to say when the U.S. sneezed, the world caught a cold. Certainly Latin American economies today are better prepared than in the past to deal with this. First of all, this is a Latin America with inflation rates that are averaging close to 6 percent with average growth of 5 percent. They have positive current account balances, and their countries are receiving foreign direct investment in record numbers atop the remittances coming from Latin Americans living abroad, who have become very important. We estimate they bring in $62 billion per year. All of that together puts Latin America on a footing that can face up to the situation differently than in the past. But a short recession is one thing. If it's a long recession, that's something else.

Some countries will weather the storm better than others.
What I would say of Latin America today is that it's a very heterogeneous region. There are countries like Brazil that have a much better chance than a small country that imports food and oil. We used to talk about Asian tigers, and you could say that for Latin America, too—Chile, Peru, Colombia. Panama is growing at 11 percent! There are countries in Latin America that are achieving higher growth rates partly because they are producers of energy (or at least they're self-sustainable) but also because they're good producers of food. Bernanke said we're entering a recession yesterday?

He said it was "possible."
I think we're talking ourselves into a recession … Technically speaking, a recession is two quarters of negative economic growth. The real question is how long the slump in the United States takes place. If it grows at 1 percent for a long time, that's a problem, because the U.S. is a huge driver of consumption around the world.

There's a growing chorus that wants supranational bodies like the Bank to save the international finance system from itself.
Look, there's a lot of talk about the IMF and the other things it should be doing, and I agree with those who say we need certain bodies—like those suggested by Gordon Brown and others—because we have a different financial system in just the last 15 years. There's a sophistication, and we need new regulations and ways to think about it.

One line of thought is that the worst crashes come when financial innovators outpace the regulators. Did securitized mortgages and other SIVs evolve too fast to oversee?
That always happens. How do you regulate a hedge fund that has a group of assets in the morning and a different one at night? It's very difficult. I applaud Secretary Paulson for opening a big discussion about regulation, because this is the kind of thinking that any crisis should bring.

Are your constituents around the Americas angry at the United States for not having done enough to avert this crisis?
I haven't seen that in a very public way, because the effects haven't been felt throughout Latin America quite yet. But people are concerned. Take remittances in Mexico: they had been growing by double digits, but last year they grew by only 1 percent. That has an impact. But we haven't seen how this will hit the world quite yet.

Is it paradoxical that some of the strongest economies in Latin America—Brazil, Venezuela—are helmed by more statist-minded presidents?
It's a paradoxical region, and you can't compare one country to the next. Some countries depend on natural resources for their results, but there have been windfalls in agro, in addition to oil. Different governments have to have different policies. Latin America today is democratic—people select the leaders they want. We should respect the outcomes of democracy.

With economies growing so fast, are development banks still necessary in Latin America?
Yes. Our mission is to help in the reduction of poverty. There has been a tremendous reduction in extreme poverty, but with growth comes challenges—the need to improve infrastructure and the quality of education (because growth has produced an emerging middle class).

Venezuela will open its own development group, the Bank of the South. If it makes different conditions for aid, does it pose a threat to the policies you're implementing?
Most of what we do is around transferring knowledge for our projects. The Bank of the South hasn't even been created! It will put fewer conditions on loans, but we have worked with all development banks in the past in each region.