Monetary Policy in Guatemala: History of a grave mistake

The world is head in one direction, Guatemala in the next. While Guatemala is destroying its business capacity by restricting the means of payment, the rest of the work is doing the opposite.

Wednesday, September 17, 2008

Before 1871 the Guatemalan economy was expressed in terms of the bills and coins in circulation plus money in the bank. Today this is known as the monetary base. After the reforms, not only coffee produce economic protagonism, but the banks also, via financial intermediation, which is the reason why the cash deposits on hand became an important liquidity component.

Today, banks around the world are very liquid due to deposits and credits (except for Somalia where there are no banks, not even a Central Bank), and all the central banks in the world consider this liquidity as relevant to the forms of payment and is called M1.

There is a widespread consensus among experts and businessmen that the country's liquidity is being drastically reduced and this translates to a....



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More on this topic

Leading Interest Rate in Guatemala Rises to 5.25%

April 2013

Taking into account inflation expectations, the Monetary Board has increased the leading interest rate by 0.25% , going from 5% to 5.25%.

From a press release issued by the Bank of Guatemala (Banguat):

The Monetary Board in its meeting today, after learning the balance of inflation risks, based on comprehensive analysis of the external and internal situation, has decided to raise the level of the monetary policy leading interest rate by 25 base points, going from 5.00% to 5.25%.

Guatemala businessmen unhappy with anti-inflation measures

July 2008

Guatemala's business sector has expressed disappointment with some of the monetary policy measures that were imposed to deal with inflation.

One of these is the tightening of the money supply, which they say has a negative effect on the country's economic growth.
The Bank of Guatemala has taken excess liquidity out of the economy to discourage spending and to keep prices down.

Leading Rate in Guatemala Remains at 5.25%

August 2013

The Monetary Board, at its meeting on July 31, decided to keep the level of the monetary policy leading interest rate at 5.25%.  

From a press release by the Bank of Guatemala:

The Monetary Board in its meeting today decided to keep the level of the monetary policy leading interest rate at 5.25%, based on comprehensive analysis of the external and internal situation, after finding out about the Balance Inflation Risks.

New source of financial and monetary information

November 2008

Managed by CABI and financed by the Soros Foundation, the Mirador Monetario will contribute to transparency in the Financial System of Guatemala.

Managed by Central American Business Intelligence, the mission of the Mirador Monetario is "to be the leading source of information and education regarding financial monetary matters and to expand to the rest of countries in CA."

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