Following the approval of the Bitcoin Law in El Salvador by the members of the Legislative Assembly, which creates a legal framework that recognizes this digital currency as legal tender in the country, the IMF warns that financial and legal risks have arisen.
Negotiable certificates of deposit, a new investment tool that was authorized in El Salvador, generates expectations because it promises to improve the yield of savings and may be processed with no need to register it in an agency.
The Standards Committee of the Central Reserve Bank (BCR) authorized on February 2, 2021 the new investment tool called negotiable certificates of deposit (CDN).
Between July and October 2020, the number of people in El Salvador exploring mortgage options online increased by 18%, and the number of Costa Rican consumers looking to buy credit cards decreased by 60%.
CentralAmericaData's interactive platform Consumer Insights monitors in real time the changes in consumer habits in all markets in the region and in other Latin American countries, with fundamental information to understand their behavior, new trends and anticipate eventual changes in their purchase patterns.
Given the outbreak of covid-19 and the imposition of restrictions on economic activity, between February and June of this year the amount of loans granted by the banking sector reported a 1.2% drop.
Data from the Superintendence of the Financial System (SSF) indicate that between February (the month before the beginning of the health and economic crisis) and June of this year, the credit portfolio contracted by $149 million, from $13.276 million to $13.127 million.
In the countries of the region, more than 8 million people are looking for credit on the Internet. Of this group of consumers, approximately 9% explore options for taking out a student loan.
The interactive information system developed by CentralAmericaData monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
At a regional level, nearly 16 million people are looking to purchase financial services online. Of this group of consumers, approximately 11% are exploring options for acquiring a credit card.
The interactive information system developed by CentralAmericaData, monitors in real time the changes in consumer habits in all markets of the region, with fundamental information to understand the new commercial environment that has emerged in an accelerated manner.
The coronavirus has left an economic impact in several countries. For this reason, some governments are developing exceptional measures to mitigate its effects. For example, the suspension of tax and mortgage payments to lessen the economic pressure on small businesses and households.
In the United States, interest rates were reduced to almost zero and a US$700 billion stimulus program was launched in a bid to protect its economy, says Mario Miranda, director of finance at MonederoSMART.
Fitch Ratings agreed to change the perspective of the region's banks from stable to negative, arguing that the current health crisis will affect financial institutions in all countries.
Considering the measures that countries have adopted in the last 15 days in economic matters, following the spread of covid-19, Fitch expects that there will be a decrease in the issuance of loans.
In El Salvador, banks will not be able to charge any kind of penalty to clients who, due to the crisis of the covid-19, fail to pay their credit quotas.
They were approved "Temporary Technical Norms to Face Noncompliance’s and Contractual Obligations" derived from the emergency were approved, which will avoid that, during the validity of the emergency, the credit risk category of Salvadorans is affected, therefore, no penalty will be charged for non payment. With these rules will also allow the granting of credits, consolidation, restructuring and refinancing of debts in favorable conditions for those affected by the COVID-19 pandemic, reported the Central Reserve Bank (BCR).
The impact of the coronavirus crisis on the financial sector in Central America is expected to be felt mainly in services related to stock brokerage and investment advice, where a drop is expected.
The "Information System for the Impact Analysis of Covid-19 on Business", prepared by the Trade Intelligence Unit of CentralAmericaData, measures the degree of impact that the crisis will have on companies according to their sector or economic activity, during the coming months.
Up to July 2019, gross loans in the country totaled $12,840 million, 5% more than the amount reported in the same month of 2018.
With respect to the assets of the banking system, data from the Superintendence of the Financial System (SSF) detail that up to July of this year totaled $18.558 million, which represents a $1.016 million increase when compared to the balance of the same month in 2018.
After the abolition of the Financial Operations Tax last year in El Salvador, credit to the productive sector increased from 5% in 2018 to 9% at the beginning of 2019.
The Constitutional Chamber of the Supreme Court of Justice issued a ruling, in which it was ordered to cease charging at the end of 2018 a tax that levied 0.25% on financial operations of $1,000 and above. This decision had a positive impact, according to directors of the system's banks.
Up to March of this year, Salvadoran financial institutions registered credits to the construction sector for $521 million, 40% more than what was reported at the end of the same month in 2018.
Data from the Salvadoran Banking Association (Abansa) specify that between March 2018 and the same month of 2019 the net loan portfolio registered a 5.6% growth, going from $11,717.1 million to $12,372.7 million.
From May 2019, foreign customers will have to declare to local system banks that their funds meet their country's tax requirements.
The Superintendence of Banks of Panama (SBP) approved Agreement 02-2019, which implements the recommendations of the Financial Action Task Force, which consists of expanding the required due diligence measures of banks with their customers.
Limiting the fees charged in Costa Rica and establishing a law that defines market limits in Guatemala are part of the attempts being made in the region to regulate the use of credit cards.
A law proposal presented last January before the Legislative Assembly of Costa Rica, aims to regulate the percentage of the commission paid by businesses for credit or debit cards. According to the initiative, this task would be in charge of the Central Bank and the Commission to Promote Competition.
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