You are here -allRefer - Reference - Country Study & Country Guide - El Salvador >

allRefer Reference and Encyclopedia Resource

allRefer    
allRefer
   


-- Country Study & Guide --     

 

El Salvador

 
Country Guide
Afghanistan
Albania
Algeria
Angola
Armenia
Austria
Azerbaijan
Bahrain
Bangladesh
Belarus
Belize
Bhutan
Bolivia
Brazil
Bulgaria
Cambodia
Chad
Chile
China
Colombia
Caribbean Islands
Comoros
Cyprus
Czechoslovakia
Dominican Republic
Ecuador
Egypt
El Salvador
Estonia
Ethiopia
Finland
Georgia
Germany
Germany (East)
Ghana
Guyana
Haiti
Honduras
Hungary
India
Indonesia
Iran
Iraq
Israel
Cote d'Ivoire
Japan
Jordan
Kazakhstan
Kuwait
Kyrgyzstan
Latvia
Laos
Lebanon
Libya
Lithuania
Macau
Madagascar
Maldives
Mauritania
Mauritius
Mexico
Moldova
Mongolia
Nepal
Nicaragua
Nigeria
North Korea
Oman
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Seychelles
Singapore
Somalia
South Africa
South Korea
Soviet Union [USSR]
Spain
Sri Lanka
Sudan
Syria
Tajikistan
Thailand
Turkmenistan
Turkey
Uganda
United Arab Emirates
Uruguay
Uzbekistan
Venezuela
Vietnam
Yugoslavia
Zaire

El Salvador

The Banking System

Since 1980 the entire Salvadoran banking system has been owned and operated by the government. Under nationalization, the Central Reserve Bank, through the Operative Fund (Fondo Operativo), rationed foreign exchange to the commercial banks. The Central Reserve Bank assigned each commercial bank a maximum allowable balance of foreign exchange and required a weekly balance report. The Central Reserve Bank also covered foreign exchange deficits of the commercial banks but required that they transfer large surpluses to the Central Reserve Bank. In turn, these commercial banks agreed to disburse foreign exchange for imports on priorities set by the Central Reserve Bank in exchange for the services rendered. The highest priorities for foreign exchange disbursements included food, medical supplies, raw materials, and petroleum products, followed by intermediate goods, money for medical expenses and activities abroad, and debt servicing.

Prior to the nationalization of the banking sector, El Salvador had numerous private financial institutions that were called banks but that actually functioned like investment companies. Members, who had contracts with the companies, contributed funds on a regular basis and then used this capital as collateral. Some of the more important "banks" included the Investment and Savings Bank, the Credit and Savings Bank, the Commercial Farm Bank, and the Popular Credit Bank. The Popular Credit Bank had broader powers than the others and could accept time deposits and savings accounts, deal in foreign exchange, and extend letters of credit. The Salvadoran Coffee Company and the Salvadoran Cotton Cooperative also provided seasonal credit to their members. Their activities were not financed by deposits, but rather by loans from foreign banks (mostly United States institutions).

As a result of the civil conflict and the 1980 government decree nationalizing the banking system, many Salvadorans transferred their savings out of the country. Consequently, private savings fell from a 34 percent share of GDP in 1979 to a 32 percent share in 1980. Capital outflows, however, were heavier than this statistic would indicate because GDP fell by 8 percent in the same year. By 1982, nonetheless, private sector confidence in the banking system had been tentatively restored, and private savings increased to 39 percent of GDP. The increase was primarily attributed to a 1982 rise in interest rates, which provided an incentive for saving.

Data as of November 1988

El Salvador - TABLE OF CONTENTS

  • The Economy


  • Go Up - Top of Page

    Make allRefer Reference your HomepageAdd allRefer Reference to your FavoritesGo to Top of PagePrint this PageSend this Page to a Friend


    Information Courtesy: The Library of Congress - Country Studies


    Content on this web site is provided for informational purposes only. We accept no responsibility for any loss, injury or inconvenience sustained by any person resulting from information published on this site. We encourage you to verify any critical information with the relevant authorities.

     

     

     
     


    About Us | Contact Us | Terms of Use | Privacy | Links Directory
    Link to allRefer | Add allRefer Search to your site

    ©allRefer
    All Rights reserved. Site best viewed in 800 x 600 resolution.