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AmericasJuly 2 2006

El Salvador central bankers pull rank

Sometimes, however, it is not the US authorities that give central American banks a hard time, it is their own authorities. El Salvadorean banks are miffed because the investment reserves they deposit at the central bank are outsourced to international investment banks to manage.
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Citi, UBS and Deutsche are names that are bandied about, though these are unconfirmed.

The reserves in question amount to somewhere in the region of $1bn (25% of deposits) and bankers in San Salvador say that under the laws that paved the way for dollarisation, the banks should be allowed to manage the reserves themselves. A central bank without a currency is, of course, a rather forlorn institution and there is a sneaking suspicion that keeping hold of the reserves is a way of staying in business.

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