On Thursday, August 2nd the Board of Directors of the Central Bank of Costa Rica (BCCR) decided to repeal the amendment to Articles 3 and 22 of the Regulation for Foreign Exchange Transactions, despite having conducted a public consultation process on the matter. The objective was to establish clear rules that would help reduce the margin of exchange intermediation and oblige all entities authorized to participate in the exchange market through the MONEX system to notify the BCCR of the exchange rates they would apply for the purchase and sale.
The modifications were intended to include the surcharges, commissions or other costs in the final amount of the exchange, thus making the value to be received or paid by the client more transparent. In addition, the difference between the purchase and sale values was not to exceed the effective exchange margin (effective sale exchange rate – effective purchase exchange rate), resulting from the daily data sent by each institution. The price of the foreign currency at the counter would have been communicated before the start of the day, and updated in less than 10 minutes after each modification, always displayed on the operating premises and the entities’ websites.
with this decision, the BCCR rules out the possibility of clients accessing the same exchange rate regardless of the volume of money they are going to trade. The information to which the public had access was the key point, bearing in mind that many times the announced value did not coincide with the real price applied by banks and exchange houses. The banking authority considered that unifying the disseminated data would encourage better price formation and increase the level of competition in the sector by revealing which intermediaries offered better terms.
The comments received during the public consultation discouraged the BCCR from continuing with the reforms, as there was a potential for high levels of non-financial residual risks that it would take time to mitigate. Institutions such as the Costa Rican Banking Association and the Costa Rican Chamber of Banks and Financial Institutions may have convinced the authority not to go ahead with these modifications, given the resulting uncertainty that would be generated in the exchange market.