Panama: Choice Property Investment
(choicepropertyinvestment.com) While the rest of the world is trying to fumble through the global financial crisis, Panama seems to have little problem with the liquidity of their financial institutions.
Olegario Barrelier, Banking Superintendent for Panama, has stated that the liquidity in Panama’s financial sector is approximately 58 percent of its deposits. Additionally, the country has “manageable exposure” to international markets that have suffered the punishment from the American credit crisis.
“At the moment our banks are good, very good. They are healthy, they are liquid; capital is nearly double what is required. They are being financed by local deposits and are not dependent on external financial markets,” Barrelier said.
Panama, whose currency is the US dollar, remains a center for offshore banking and continues to maintain 90 banks - about 40 of them operating on an international level. Because the nation has no central bank or safety net, Panama’s banks have been encouraged to keep “highly liquid.”
Superintendent Barrelier acknowledges that the global credit crunch will eventually affect Panama, but unlike other countries, the crisis will slow down Panama’s economy, rather than inflicting significant damage on the country’s financial foundation. There have been precautions taken, however. In January of this year, Panama’s banks were advised to tighten lending and credit to hinder the skyrocketing annual inflation, which stood around 10 percent. That percentage shows just how much weaker the dollar has become compared to the 1990s. Reports show that between 1955 and 2000, annual inflation was recorded at an average of 2.4% per year. During the 1990s, the rate barely exceeded 1 percent per year.
Source: Contrarian Profits
