Reform package could consolidate state financial entities

The Paraguayan banking system reform package currently in congress would merge the three main state-run financial entities currently operating into one large state-bank, central bank spokesperson Martin Von Schocher told BNamericas. The reform bill, which has been in congress for approximately one year, will be voted on by the upper house December 9. The reform package must be voted on no later than the ninth in accordance with an agreement signed with the IMF. "The reform package makes up only part of the far-reaching reforms being implemented in the financial system," Von Schocher said. The present administration and central bank authorities all support the bill and are lobbying for its passage in the upper house. "The merger will be an element in an overall reform process that seeks to cut down on bureaucratic inefficiencies that are commonplace in our financial system," Von Schocher said. The state bank, to be called Banco de la República, would be formed of a universal bank as well as a second floor bank, which would only offer loans and other financial products through other banks. The creation of a second floor bank is one of the elements of the reform package that is being debated, and threatens to derail the entire bill. "There is no way to know whether the congress will approve or reject the bill, the central bank does not have confirmation what will happen," the central bank spokesperson added.