The Central Bank of Costa Rica has suggested creating a benchmark rate for dollars, similar to passive base rate applied to the local currency, the Colón.
With the proposal, the Central Bank aims to "reflect the cost faced by financial intermediaries in the country of having funds in dollars," taking into account references for interest rates where entities are funded abroad and other external factors.
The Central Bank of Costa Rica said that the new formula for calculating the base rate means that it will be a more stable indicator.
Rodrigo Bolaños, president of the institution, explained that this will help over 400,000 borrowers who have credit obligations linked to this indicator.
The new methodology was presented yesterday and today will be published in the official gazette, meaning that it will become effective within 10 days, if there are no comments.
According to Costa Rican Central Bank President Rodrigo Bolaños, interest rates will continue to rise and the fiscal deficit is not sustainable.
In an interview with the website ElFinanciero.com Central Bank President Rodrigo Bolaños revised economic projections and reviewed issues such as interest rates, the fiscal deficit and current market liquidity.
The difference in the interest paid by banks on deposits and loans can be as much as 22%.
Intermediation margins are a measure how a financial sector performs its mediation role and is one indicator of efficiency. Though there are various ways to calculate the figure, Costa Rica's margin is higher than in other economies.
Gabriela Mayorga López in Elfinancierocr.com comments on a study from the Costa Rican Banking Association (ABC in Spanish) that indicates that in June, "Banco Promérica recorded the largest colones margin with 21.8%. It was followed by Citi with 14.3% and Banco General with 14%. Banco Popular had the highest dollar margin with 7.8%".