Is a Reference Rate for Dollars Useful?

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.

Thursday, May 8, 2014

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 calculation methodology emulates, in part, the one for the passive base rate, which includes averages of the yields in the financial system on terms of between 150 and 210 days. If this new rate were implemented, financial institutions could link their dollar credit operations to this new instrument."

"According to Bolaños, loans with variable interest rates take into account references rates calculated in other countries and they take into account the economic conditions where they come from, such as the Libor of Great Britain and the Prime rate in the U.S"



More on this topic

Costa Rica: Passive Base Rate Continues to Fall and Reaches 6.15%

November 2015

The main reference for loans and investments is continuing on its downward trend and will be located at 6.15% until at least 11 November.

The Central Bank of Costa Rica announced that the passive base rate dropped from 6.25% to 6.15% in the last week, and will remain at that level until at least 11 November.

Costa Rica: Changes in Interest Rate Calculation

October 2015

From February 2016 the calculation of the passive base rate made by the Central Bank will incorporate total term deposits in colones and the atypical transactions that are excluded will be redefined.

The Central Bank of Costa Rica announced that as of February 3, 2016 a new method of calculating the main benchmark for interest rate loans and investments in the country will come into effect.

Costa Rica: Passive Base Rate Drops to 6.55%

July 2014

The reference rate for investments and loans in the country dropped from 7% to 6.95% and will be located at that level until at least July 23.

The basic interest rate has gone down again to 6.95%, a level at which it stood for four consecutive weeks before rising to 7% last week.

Costa Rica: Passive Base Rate Continues to Rise and Reaches 6.95%

June 2014

The primary reference rate for loans and investments in the country went up by 5 basis points to 6.95% and will be located at this level at least until 18 June.

For the third consecutive week the passive base rate has risen, this is the indicator calculated by the Central Bank from the average deposits rate at financial institutions for maturities of between 150 to 210 days.

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