Government orders private banks to offer electronic money services, then backs down

Dec 20, 2016 | 0 comments

An uneasy truce between regulators and Ecuador’s private banking system is in place following an order and then a retraction that banks provide services for the government’s electronic money system.

Market Control chief Pedro Páez.

The system, unveiled by Ecuador’s Central Bank in 2014 to work through cell phones, has proven a major disappointment for the government. While Central Bank officials predicted it would have 800,000 to a million active accounts by the end of 2016, less than 10% of that number exist today and only a small portion of those are active.

The system was designed to be voluntary with private banks invited to participate if they chose.

Last Wednesday, the Superintendencia of Control of Market Power ordered banks to provide a full range of electronic money services whether they wanted to or not, claiming that they had openly discouraged clients from participating in the system. Director of the Superintendencia, Pedro Páez, said the intention of the order was to “seek market efficiency, fair trade, and general well-being.” Páez gave the banks 30 days to comply.

Chairman of the Banco Pichincha Fidel Egas, as well as officials at other banks, responded that his bank would refuse to follow the order. “This is government overreach that we will not tolerate,” he said, adding that following the order could trigger nationwide “banking panic.”

Only hours after Páez issued his order, it was effectively rescinded when another government agency, the Monetary and Financial Policy and Regulatory Junta, claimed that it, not the Superintendencia of Control of Market Power, was responsible for giving orders to private banks. The junta gave no indication of whether it was interested in pursuing Páez’s order.

Latest figured show the system has only 72,000 voluntary sign-ups. The government has opened an additional 120,000 non-voluntary accounts since May for the purpose of transacting government business with citizens.

CuencaHighLife

Dani News

Google ad

Hogar Esperanza News

Fund Grace News

The Cuenca Dispatch

Week of March 24

“They are pressuring me to resign so they can remove me from office,” denounced Verónica Abad, Vice President of the Republic.

Read more

Ecuador Navigates Economic Challenges with IMF Agreement Looming.

Read more

“Since when does thinking differently mean being a traitor?” Pierina Correa questions in reference to the Tourism Law.

Read more

Property 3br News

Google ad