Senate Committee Meets with Financial Sector: BanRep Opens Consultation on Transitional Liquidity Support
Colombia
20 abril 2020

On April 20, the Senate’s Third Committee held a virtual meeting with Colombian financial sector representatives to discuss the issue of credit within the framework of the economic and social emergency caused by the COVID-19 pandemic. The senators’ goal was to perform political control tasks and evaluate the measures being taken in the sector. In addition, the Banco de la República of Colombia (BanRep, in Spanish) has launched a public consultation on transitional liquidity support. The consultation will be open until April 24 and comments can be sent here.

At the committee meeting were Jorge Castaño, Financial Superintendent; Javier Díaz, Superintendent of Bancoldex; Santiago Castro, President of Asobancaria; and Juan Pablo Zárate, Deputy Minister of Finance. The key points made were:

  • Third Committee President, David Barguil (Conservative Party – allied with the ruling party). During his presentation, he proposed a widespread national agreement to lower interest rates. Barguil denounced that, during the first days of April, some banks in the country raised interest rates for credit cards, as well as for ordinary commercial credit and for preferential commercial loans. Finally, he said that the country’s entities had not canceled interest or frozen credits, and that they were only giving grace periods. Finally, he reported that Bancoldex credit lines are not reaching the productive sectors that need them.
  • Financial Superintendent, Juan Castaño. During his presentation, the official explained that the entity is currently working on three lines of action. The first is to ensure the stability of the financial system, preserving solvency. The second is the services provision continuity, encouraging the use of digital tools. Finally, the third is supervision continuity, focused anticipating and managing any emergent risks. 
  • Deputy Finance Minister, Juan Pablo Zárate. He explained that some of the measures aimed at relieving the current financial crisis included cutting taxes on financial intermediation, such as the legal reserve. He also highlighted the provision of greater liquidity through BanRep and capital support through the National Guarantee Fund. 
  • Senator Maria del Rosario Guerra. She asked the Financial Superintendent to analyze the new payroll protection loans and pointed out that this new line should not be used to refinance previous loans. She added that “if we do not use these resources properly, particularly given that they are scarce in this emergency, we will not achieve the main objective, which is to put a halt to unemployment.” 

BanRep also opened a public consultation on a draft regulation on transitional liquidity support. The purpose of these regulations is to establish guidelines for the support granted by this entity to credit institutions working as last resort lenders. Those interested in sending comments on the regulations may do so until April 24, 2020, here.

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