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The president of the Central Bank of Costa Rica (BCCR), Róger Madrigal, believes that the financial system regulator should evaluate the current rules for providing dollar credit to debtors with income in colones.
The concerns of senior management are based on the strong growth of foreign currency financing. As of May last year, the year-on-year change in the outstanding balance of US dollar loans was 11.9%, while the BCCR expects it to grow by 7% this year.
According to a publication nationOn Thursday, June 27, the fall in exchange rates and interest rate spreads prompted many bank clients to switch to funding in U.S. dollars. A large portion of these businesses were awarded to non-currency generators.
been: Lower exchange rates boost dollar lending
“The growth of dollar credit is a public policy issue for the central bank and regulators. We need to conduct a review to assess the effectiveness of these measures for agents with foreign exchange risk and those with foreign exchange insurance,” the official explained. Thursday, June 20during a press conference held after the board’s monetary policy meeting.
Madrigal believes there are some unwise debtors who think Costa Rica does not have currency risk. “There is currency risk. Recently, in a very short period of time from April to early June, the exchange rate fluctuated by nearly 7%; then it went back down, but it is variable.”
BCCR Chairman USD Credit
In Costa Rica, he said, there are many external influences on the exchange rate, such as the impact on fuel prices, which can have an impact on debtors, especially if they lack insurance coverage.
Last January, in the introduction Monetary Policy ReportOfficial data show that the growth of dollar loans reached 11.1% in 2023. However, the issuer explained that the BCCR forecast for this year is that this growth will slow down to 5%, and the trend will continue to decline to 3% by 2025.
The expected deceleration is mainly based on two factors. One is the base effect of the recovery, because the growth rate in 2023 was very high, which affected the comparative performance this year.
Another is banking regulations, since they require financial entities to conduct a more detailed analysis when a person interested in applying for a foreign currency loan does not have natural or financial security of foreign currency income.
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