The mouse guarding the cheese – The Universe

Before and after the creation of the Central Bank of Ecuador (ECB) our rulers have had an obsession with the banking. Why? Because it is there where lies the money of others. Guillermo Arosemena noted in the introduction to his book about the banking history of ecuador (1998) that, historically, "the rulers in their eagerness to finance the demagógicos expenses of the budget… issued their own banknotes… or forced the banks of issue to issue notes without backing. Banking could not be long-lived… because on more than one occasion, the ruler in turn stormed to the financial institutions and passed laws that usurped wealth". Unfortunately, this obsession is not removed by dollarization.

The Board of Currency Regulation Financial ("Super Board"), from which was born in 2014, lives busy looking for what to do at the Central Bank of Ecuador (ECB), which should already be gone from us dolarizamos. At least, even before this Government, his existence was safe. The ECB had limited powers, which had isolated the public finances of the private financial system.

But from the force of the Organic Code of Monetary and Financial, the ECB has been providing increasing amounts of the International Reserves (IR) to the Central Government. The funds which make up the RI does not belong to him or to the ECB or to the Government, but to the depositors of the institutions of the financial system and to the affiliates of social security, regional governments and other public entities.

this is how the ECB has come to commit the irresponsibility of behaving like a commercial bank, fractional reserve. Promised to ensure the stability of the financial system and is now showing to the contrary.

Consider the recent decisions issued by the Super Board, there are three resolutions that will lead to a greater concentration of resources of the financial system and of public institutions in the ECB. The first lift the socket bank 2% to 5% for banks with more than $ 1,000 million in assets. This is the more controversial, although its effect given the low demand for credit, and considering that the banks already have a surplus of lace much higher than the 5% deposited at the ECB, it would seem harmless. But if so, why do they do it?

The second alters the way of calculating the minimum requirement of liquidity that banks are required to maintain in the country. This will force the banks have to repatriate between $ 400 and $ 500 million of their funds, thus increasing their deposits at the ECB.

The third requires entities to non-financial public sector to obtain approval of the Super Board before you can have deposits and investments abroad. In addition, it forces those that currently hold deposits and investments abroad to repatriate until the end of the year and deposit them at the ECB.

These resolutions are in a form awkward to achieve their revealed (and illegitimate) objective of financing the Government with the money of others, adding uncertainty to the economy and infect still more to the private financial system of the disastrous public finances. Hopefully the next Government will cut the roots of evil by eliminating the unnecessary and harmful ECB. (Or)