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"

Source: elfinancierocr.com

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November 2015

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

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