Boletín Monetario y Financiero

This bulletin was published quarterly between 1995 and 2001, until 2002, when an annual edition was presented. The publication included an analysis of the behavior of the international and local economy, the capital market and the main regulatory changes that occurred in the period, as well as the main developments observed in monetary variables and in the financial system.

Executive summary

During the second quarter of 2001, prospects for a slowdown in the world economy were heightened. The main developed economies responded to this reality by deepening the expansionary bias of their monetary policies. Despite the context of lower reference interest rates, the deterioration of expectations observed in the international capital market conditioned access to financing for emerging economies.

In the period under analysis, the level of domestic economic activity observed a significantly smaller decrease than that recorded in recent quarters; while the latest measurements on employment showed a slight rebound in the unemployment rate. On the other hand, consistent with the evolution of production, investment and consumption, the statistics of the external sector reported the fifth consecutive quarter of surplus in the trade balance; at the same time, the National Public Sector registered an increase in the level of its deficit. In this context of stagnation in the real economy, the main variables of the capital market accentuated the unfavorable trend observed during the first three months of 2001. At the end of the period under analysis, the public debt swap operation – mega-swap – generated a certain change in the expectations of economic agents.

Given the prevailing high degree of uncertainty, monetary variables were unable to develop a sustained recovery during the second quarter of 2001, after registering an adverse behavior in the first months of the year. Private sector deposits barely increased, showing a heterogeneous behavior according to the type of placement. Interest rates, especially fixed-term rates on large deposits, showed significant volatility, above high average levels. In order to address situations of market illiquidity, the Central Bank relaxed the rules on minimum requirements and granted active passes to entities. The financial system’s international reserves declined, following the behavior of bank liabilities subject to reserve requirements and policy responses.

The context of deceleration and subsequent retraction in the level of bank intermediation observed in recent quarters paced the pace of consolidation in the sector. However, banks continued to develop their distribution channels and recorded a slight upturn in productivity levels. Regarding the evolution of private banks in the quarter under analysis, it should be noted that net assets decreased slightly. The resources from the decrease in loans and the increase in deposits in the non-financial sector were basically channeled to increase the holding of liquid assets and cancel other debt securities. In the quarter, there was no significant change in the level of profitability of private banks, although there were some changes in their structure. There was an increase in uncollectibility charges, which in the aggregate was offset by an increase in the result for services. Finally, the solvency levels of private banks deteriorated slightly during the second quarter of 2001, although it should be noted that they remain at levels above the minimum recommended internationally.