“It is urgent one deregulation of the traditional financial system“, according to the report presented by the Latin American Economic Research Foundation (FIEL)The proposal comes in a context marked by the Recent advances in fintech and the lack of regulation on these companies.
For this reason, it is that Daniel Artana, chief economist at FIEL, He said that “the competition between the banks and the fintech must be given with the same rules of the game.” On the one hand, with a “prudential regulation” for technology companies in the sector and, on the other hand, with the development of a more “free” system for banks.
Within the presentation, economists They highlighted the negative impact that have the regulations on the financial inclusion and they postulated the need to move towards a deep liberalisation of the activity“We must give them the freedom to provide the services they want free of charge,” said Artana.
Deregulation of the financial system: what are the 9 regulations that are proposed to be eliminated?
The main regulations that limit the prices of the services offered, the quantities offered and the efficiency of the system, are:
1) Obligation to offer free products and services
He Central Bank (BCRA) requires financial institutions to offer free financial products and services. These are part of the usual policies to encourage financial inclusion. However, the current regulations They do not adequately justify the need for impositions that appear excessive, nor do they evaluate the associated costs and benefits, according to FIEL.
In this regard, they highlighted as an example that both savings accounts, debit cards, cash withdrawals and deposits in branches and ATMs are free. However, free of charge is not only extended to the Physical persons, but also to legal entitiesat a significant cost to the financial sector.
2) Credit card terms
Credit card terms have a lag forced between what they charge and what they pay, which historically was not the case.
3) Limitations on interest rates
The banks They must collect UVA deposits at a minimum rate, which is higher than that of the CER bonds.
4) Distribution of dividends
The imposition of a authorization prior to banks distributing dividends.
5) Minimum financing quota for SMEs
He BCRA establishes that banks must assign quotas to credit lines aimed at SMEs
6) Minimum excess cash
In Argentina, the Reservation requirements either minimum cash taxes by the BCRA, more than triple those in force in most economies in the region.
7) Net overall foreign currency position
At this point, the intention is that there are lower reserve requirements and greater capacity to use dollars from the net global position required todayso that entities can cover themselves against possible devaluations.
8) Opening, relocation and closing of branches
The opening, transfer or closing of a Bank branch requires conformity of the BCRA, generating Overcosts for banks and putting them in disadvantage compared to competitors that do not have physical branches like fintechs. In this sense, Artana pointed out that there must also be “pressure from unions not to close branches” and hence, lay off staff.
9) Cash management
The cash management is burdensome, especially the excessive requirements for its transportation. Cash withdrawal and deposit are free, although there are costs associated with these tasks.
The initiative for the deregulation of the financial system will be presented to the BCRA
The FIEL report, prepared by Artana together with Santiago Urbiztondo (Chief Economists of FIEL), Laura D’Amato (UCEMA-IIEP), Monica Bakers (Senior Economist) and Juan Pablo Brichetti (associate economist), proposes a profound deregulation of the financial system. From the Foundation, they anticipated that it will be presented for the title of BCRA, Santiago Bausiliin case you are interested in the analysis and proposal it contains.
The purpose of deregulationbasically, is for:
- Making financial services cheaper and promoting financial inclusion.
- Boost economic growth and improve productivity.
- Encourage innovation and variety of financial products, on a level playing field.
Artana emphasized the need to advance deregulation in order to “reduce expenses” Unnecessary and improve resource allocation “inside the banks.”
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
