Costa Rican banks await the superpowers of the Central Bank

The new project that is designed to strengthen the role of the Central Bank in controlling inflation has caused a "wait and see" attitude among the nation's banks.

Sunday, April 20, 2008

Although there are only seven measures contemplated in the proposed law to help the Central Bank reduce inflation, they represent important changes in the banking marketplace.
One of the most important is the increase in the legal minimum reserves that must be held, to 25% from 15%.
As well, the inclusion of the Banco Popular, the national development bank, in the payment of the minimum reserve is generating adverse opinions.
Gerardo Porras, manager of Banco Popular, says the he believes it's not prudent to withdraw the special concessions that it has enjoyed in the past.



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Costa Rica Suspends Foreign Credit Reserves

July 2011

Having been taken to the Constitutional Court, an appeal against a measure submitted by the Chamber of Banks and Financial Institutions, has been suspended until further ruling.

The appeal was filed against the agreement by the Board of the Central Bank of Costa Rica, which states that financial intermediaries must have reserves not only for deposits and income, as mandated by the Organic Law of the BCCR, but also operations originating from short-term external loans, revolving lines of credit contracted abroad and transactions originating in foreign loans that contain provisions for enforcement of payment in a period of less than 360 days, or that do not preclude or exclude payment in that period.

Banking Legal Reserve Requirements Reduced in Nicaragua

February 2011

The Central Bank announced that the daily legal reserve requirement will now be 12%, while it now stands at 16.25% weekly.

According to Antenor Rosales, president of the Bank, financial institutions must maintain a minimum reserve of 15% biweekly and a daily minimum reserve of 12%.

Costa Rica: Changes in the Banking Reserves Will Restrict Credit

June 2009

According to Banks, the change in the calculation of the reserve will increase the costs of the financial intermediaries and will reduce the supply of credit.

The Central Bank of Costa Rica modified the methodology used to calculate reserves, implicating that, beginning next July 1st, Banks must have deposited in the Central Bank, at the end of each day, deposits of no less than 97.5% of the minimum legal reserves for the previous month. At the moment this calculation is done based on deposits from 5 days beforehand and it is at 90%.

Costa Rica: High reserve requirements would raise credit costs

April 2008

Raising the minimum legal reserve requirements for commercial banks and financiers could translate into an increase in interest rates for customers.

The increase in reserve requirements is being considered in an effort to capitalize the Central Bank and give it more power to control inflation. The Executive Branch has sent a bill that would have this effect to the Legislative Assembly.

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