Central Bank of Ecuador

Economy of Ecuador

Overview
Agriculture Central Bank of Ecuador Companies Mining Currency Tourism
Ecuador topics
Culture Education Geography History
Ecuador portal

The Central Bank of Ecuador (Spanish: Banco Central del Ecuador (BCE)) is the central bank of Ecuador.

The Revolución Juliana (July 9, 1925) initiated the process of founding a national bank issuer. The country's crisis, caused by non-convertibility of the currency, banknote printing without reserves to support the increase in currency, inflation, speculation, abuse of credit, unbalanced payments, lack of official control over the banks and banking anarchy and strife, required cleaning up the currency situation.

Foundation

The Central Bank of Ecuador is the organization created to meet these goals, within a patchwork of reforms of the Ecuadorian economy advocated by the military and civilians who supported Julian ideas. However, as the exchange rate and monetary regime are extremely sensitive in a small open economy like Ecuador's, the proposal had to evolve and overcome the inertia of social sectors uninterested in progress of that nature. An intermediate step was the creation of the Central Fund of Issue and Redemption on June 26, 1926, which oversees debt repayment and temporarily authorizes the circulation of banknotes.

On October 18, 1926, President Isidro Ayora declared that banks authorized to issue banknotes must hand over to the Central Fund specified quantities of gold and silver which, in total, amounted to ten million six hundred thousand sucres. Meanwhile, the mission headed by Edwin W. Kemmerer prepared a comprehensive economic overhaul, which modernised Ecuador's financial practices. Kemmerer was chosen for this task as he had successfully performed similar tasks in other countries in South America.

On February 11, 1927, the Kemmerer mission presented their findings to the Government Bill of the Central Bank of Ecuador, together with an explanatory memorandum. They suggested a corporation licensed for 50 years to issue money, discounted at a fixed rate, become a repository of government and member banks, manage the foreign exchange market and serve as fiscal agent for the country as a whole. Because the functions of the new institution were "closely linked to the sovereign rights of the Government and the public interest, the Government was asked to participate in his administration.

On March 12, 1927, the President Isidro Ayora enacted the Organic Law of Central Bank of Ecuador (Official Register No. 283). The preparation of the functioning of the new institution was in charge of an Organizing Committee, appointed by himself Ayora.

On 3 June 1927, Ecuador approved the statutes; they negotiated between the two agencies, and overcame difficulties between the Central Fund Release and the new institution finally on August 10, 1927 the Central Bank of Ecuador opened its doors. On 25 August 1927, Main Branch opened in Guayaquil.

Evolution

The new institution's first task was to stabilize and unify the currency. To achieve this, the Issuer Institute won the "gold standard exchange", a monetary system set the price of the sucre in terms of gold; their basic objective was to keep the price of the sucre fixed at 0.300933 grams of fine gold, or one fifth of the fine gold content of the U.S. dollar at that time. This convertibility forced an economic crisis when the United States entered its Great Depression (1929), which led to enact a new moratorium on payments on February 8, 1932.

Since then, the traditional policy of deficit spending and credit, which funded the Ecuadorian economy between 1915 and 1925, regained its validity.

Reforms

After the depression of 1929

Price instability driven by government spending and expansionary monetary policy forced the country to resort to another consultant, Manuel Gómez Morin, to reform the Central Bank Act and related monetary policy. Gómez Morin advised monetary authorities to channel credit to sectors of the economy deemed critical in the development process. Along with Victor Emilio Estrada, prominent Guayaquil banker, advised the Banco Central del Ecuador axis to determine the types of loans offered by private banks to the productive sector and changing the discount rate (1937). The difficulties in implementing the recommendations of Gomez Morin were immense. However, since then the relations between the government and banks were deeply modified.

After World War II

After World War II ended, a new surge in inflation, together with an imbalance of payments rendered it necessary, once again, to bring in foreign experts. In 1948, the manager of the Issuer Institute, Guillermo Perez Chiriboga, and Robert Triffin, from the Federal Reserve System of the United States, were called in to assist. Harvard's consultant proposed to replace the Central Bank Law and the Law of the Monetary and Foreign Exchange Law. This would require instituting a Directory of Ecuador Central Bank as an arm of the government, thereby making it responsible for overseeing national financial matters and giving it the power to devalue the currency, also to run countercyclical policies. The Issuer Institute was authorized to give loans to the state and the industrial sector, and finally, an accounting system was instituted that allowed them to assume the new functions. This was presented as the final goal of price stability and the preservation of sound financial standing.

After the upsurge of Debt

For more than three decades, this monetary regime successfully faced many shocks. However, the extent of the external debt crisis unleashed in 1981, the adjustments necessary to bring an unbalanced economy back into equilibrium, fiscal pressures, unbridled inflation and, above all, the need to reorder the whole economy to return to a more appropriate growth path, made yet more drastic changes necessary. To this end, in May 1992, the government issued the Law of Monetary Regime and State Bank, whereby the Central Bank of Ecuador was able to intervene in the financial system through open market operations. With this powerful instrument of policy, it has been possible to control inflation, unprecedented in the monetary history of Ecuador. Additionally, the need for new commitments for public sector austerity forced to violate the power to grant credit to the Treasury. Finally, in order to protect the interests of customers of the banking system, the Central Bank of Ecuador was authorized to operate as a lender of last resort, within strict financial parameters. It is clear now that the primary commitment of an institution of issue is to ensure price stability and external viability.

Financial inclusion

The Bank is engaged in developing policies to promote financial inclusion and is a member of the Alliance for Financial Inclusion.^[1] On April 26, 2012, the Banco Central del Ecuador announced it would be making specific commitments to financial inclusion under the Maya Declaration.

References

↑ "AFI members". AFI Global. 2011-10-10. Retrieved 2012-02-23.

External links

Central banks

Global

Global	Bank for International Settlements Basel Committee on Banking Supervision Financial Stability Board

By continent

Africa	Bank of Central African States Central Bank of West African States Bank of Algeria National Bank of Angola Bank of Botswana Bank of the Republic of Burundi Bank of Cape Verde Central Bank of the Comoros Central Bank of the Congo Central Bank of Djibouti Central Bank of Egypt Bank of Eritrea National Bank of Ethiopia Central Bank of The Gambia Bank of Ghana Central Bank of the Republic of Guinea Central Bank of Kenya Central Bank of Lesotho Central Bank of Liberia Central Bank of Libya Central Bank of Madagascar Reserve Bank of Malawi Central Bank of Mauritania Bank of Mauritius Bank Al-Maghrib (Morocco) Bank of Mozambique Bank of Namibia Central Bank of Nigeria National Bank of Rwanda Central Bank of São Tomé and Príncipe Central Bank of Seychelles Bank of Sierra Leone Central Bank of Somalia Bank of Somaliland South African Reserve Bank Bank of South Sudan Central Bank of Sudan Central Bank of Swaziland Bank of Tanzania Central Bank of Tunisia Bank of Uganda Bank of Zambia Reserve Bank of Zimbabwe

Americas	Central Bank of Argentina Central Bank of Aruba Central Bank of The Bahamas Central Bank of Barbados Bermuda Monetary Authority Central Bank of Brazil Bank of Canada Central Bank of Chile Bank of the Republic (Colombia) Central Bank of Cuba Central Bank of Curaçao and Sint Maarten Eastern Caribbean Central Bank Cayman Islands Monetary Authority Central Bank of Ecuador Bank of Guatemala Bank of the Republic of Haiti Central Bank of Honduras Bank of Jamaica Bank of Mexico Central Bank of Nicaragua Central Reserve Bank of Peru Central Bank of Suriname Central Bank of Trinidad and Tobago Federal Reserve System (United States) Central Bank of Uruguay Central Bank of Venezuela

Asia	Da Afghanistan Bank Central Bank of Bahrain Bangladesh Bank Royal Monetary Authority of Bhutan Brunei Currency and Monetary Board Autoriti Monetari Brunei Darussalam National Bank of Cambodia People's Bank of China Hong Kong Monetary Authority Reserve Bank of India Bank Indonesia Central Bank of the Islamic Republic of Iran Central Bank of Iraq Bank of Israel Bank of Japan Central Bank of Jordan National Bank of Kazakhstan National Bank of the Kyrgyz Republic Bank of Korea Central Bank of the Democratic People's Republic of Korea Central Bank of Kuwait Banque du Liban Monetary Authority of Macao Bank Negara Malaysia Maldives Monetary Authority Bank of Mongolia Central Bank of Myanmar Nepal Rastra Bank Central Bank of Oman State Bank of Pakistan Palestine Monetary Authority Bangko Sentral ng Pilipinas Qatar Central Bank Saudi Arabian Monetary Agency Monetary Authority of Singapore Central Bank of Sri Lanka Central Bank of Syria Central Bank of the Republic of China (Taiwan) Bank of Thailand Central Bank of Turkmenistan Central Bank of the United Arab Emirates Central Bank of Uzbekistan State Bank of Vietnam Central Bank of Yemen

Europe	European Central Bank (Eurosystem) National Bank of the Republic of Abkhazia Bank of Albania Central Bank of Armenia National Bank of Austria Central Bank of Azerbaijan National Bank of the Republic of Belarus National Bank of Belgium Central Bank of Bosnia and Herzegovina Bulgarian National Bank Croatian National Bank Central Bank of Cyprus Czech National Bank Danmarks Nationalbank (Denmark) Deutsche Bundesbank (Germany) Bank of England Bank of Estonia Bank of Finland Banque de France National Bank of Georgia Bank of Greece Hungarian National Bank Central Bank of Iceland Central Bank of Ireland Banca d'Italia Central Bank of Kosovo Bank of Latvia Bank of Lithuania Central Bank of Luxembourg National Bank of the Republic of Macedonia Central Bank of Malta National Bank of Moldova Central Bank of Montenegro De Nederlandsche Bank Norges Bank Central Bank of the Turkish Republic of Northern Cyprus National Bank of Poland Banco de Portugal National Bank of Romania Central Bank of Russia National Bank of Serbia National Bank of Slovakia Bank of Slovenia Gosbank (Soviet Union) Bank of Spain Swedish National Bank Swiss National Bank Central Bank of the Republic of Turkey National Bank of Ukraine

Oceania	Reserve Bank of Australia Reserve Bank of Fiji Reserve Bank of New Zealand Bank of Papua New Guinea Central Bank of Samoa Central Bank of Solomon Islands National Reserve Bank of Tonga

Policies and implementation

Policies	Capital requirement Contractionary monetary policy Expansionary monetary policy Basel II Basel III Basel 4

Implementation	Capital control Discount rate Interest rates Money creation Open market operation Sovereign wealth fund

Bretton Woods system

International Monetary Fund World Bank Group International Bank for Reconstruction and Development International Centre for Settlement of Investment Disputes International Development Association International Finance Corporation Multilateral Investment Guarantee Agency

Lists

List of central banks Central banks and currencies of Africa Central banks and currencies of the Caribbean Central banks and currencies of Central America and South America

Names in italics indicate non-sovereign (dependent) territories, former countries, or states with limited recognition

Companies headquartered in Quito

Avianca Ecuador Banco Central del Ecuador Banco Pichincha Banco ProCredit Canal Uno Citibank Ecuador Corporacion Favorita DK Management Services Ecuavisa El Comercio GFK Corporación Hoy La Hora Marathon Sports Movistar Ecuador Petroecuador Produbanco SAEREO TAME Teleamazonas

This article is issued from Wikipedia - version of the Sunday, September 06, 2015. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.