SOLIDIFYING THE SYSTEM

It has been 20 years since Ecuador dollarized, which, coupled with a solid banking system, has been key to weathering headwinds in recent, economically tumultuous, years. This chapter includes interviews with the public authorities in charge of establishing the country’s fiscal and dollar-based monetary policies, the Ministry of Economy and Finance and central bank, as well as the Superintendency of Banks, the banking sector watchdog. Their interviews help to paint a picture of the state of the economy at a time when Ecuador has renewed its cooperation with the IMF through a USD4.2 billion extended fund facility, involving reforms that run from establishing a more prudential fiscal policy and reducing the size of the public sector to giving the central bank more autonomy to address the country’s macroeconomic affairs. The Superintendency of Banks is also undergoing reforms to become a more efficient, independent regulator of Ecuador’s banking sector. The current government views these efforts as crucial if the country is to restore trust among international investors. On the private side, and in an interview with TBY, Efrain Vieira, Executive President of Banco del Pacífico, one of the country’s largest financial institutions, stated that in 2018 that the bank registered USD100 million in profits, a “42% increase compared to the previous year,” which reflects on the strong performance of the sector. Additionally, the banking system is moving toward higher international standards with further implementation of the Basel accords. Digitalization is also one of the features marking the development of Ecuadorian banks in the current term. In an interview with Pablo Narváez, General Manager of Banred, the executive talked to TBY about BIMO, a mobile wallet for people who have a bank account; “This app allows users to make use of their money from their bank account, but, in addition to this, BIMO serves to promote bank usage and financial inclusion. A person who does not have a bank account or is not a member of a cooperative can use BIMO to open a bank account in a few minutes without submitting any documentation.” According to central bank statistics, currently only 60% of the Ecuadorian population has access to bank services, which leaves room for financial institutions to capitalize on the remaining 40%. Regarding financial markets, we sat with Gilberto Pazmiño, President of Quito Stock Exchange, with whom we discussed Ecuador’s upcoming stock exchange legislation. “The bill reforms 94 articles. It has several articles in the taxing area, and there are many positive things that will allow a significant change in the capital markets,” he told TBY. The insurance sector has also undergone some promising recent developments. The market has opened up after the decision to lift the mandatory use of Seguros Sucre, the state-owned insurance company, for contracts involving the public sector. Through interviews with some of the sector’s leading players within this chapter, we hope to shed light on the opportunities this presents.