Reforma Financiera in Costa Rica

This paper describes the measures adopted by the Central Bank of Costa Rica in the i980s during a process of financial liberalization. It describes actions concerning quantitative credit controls, interest rate determination, minimum reserve requirements, open market operations, rediscounting, and other instruments of credit and monetary policies. Greater competition in deposit mobilization has been promoted and a money market was developed. The Central Bank was granted additional independence. The authority of the Superintendency of Banks was expanded. Regulatory avoidance followed the regulations and many loopholes were found to finance the public sector

Study of the Bill to Reform the FODEA Law: FODEA II

A bill to amend the section of the FODEA Law that regulates the rescheduling of loans was introduced in the Costa Rican Congress in July, 1988 (FODEA 11). The main reforms featured in the bill are outlined in this paper, which also contains an analysis of the effects that the bill may have on the Costa Rican National Banking System and on the nation's farmers, on the basis of an evaluation of the consequences of FODEA I. The analysis reveals that the FODEA portfolio has been highly concentrated among a small number of farmers, particularly livestock producers of the Guanacaste region. Because of the low interest rates charged on the rescheduled loans, the subsidy granted to agricultural borrowers by the FODEA Law has also become highly concentrated. If implemented, the FODEA II bill would not only increase this concentration of the FODEA portfolio, but it may also contribute to further exacerbate the revenue and liquidity losses that the banks have already experienced as a consequence of the FODEA Law

Impuesto a las Transacciones Financieras: Proyecto de Ley del Aporte Solidario Nacional

This paper reviews arguments in favor and against a tax on the flow of all bank deposits proposed by a Costa Rican legislator. The impact on the efficiency of financial intermediation is highlighted. Estimation of expected revenues is obtained on the basis of the price elasticity of the demand for deposits. Severe contraction of the tax base may prevent this tax from achieving its fiscal purposes, while important distortions in financial intermediation would slow down the rate of growth of the economy