Eduardo Jorge Prats, who resigned from his post as legal advisor to the Central Bank Governor prior to the disclosure of the Baninter scandal, writes in El Caribe newspaper today on the subject of who is responsible for banking supervision in the Dominican Republic. Jorge Prats says that the Monetary and Finance Law clearly establishes that banking supervision in the Dominican Republic is the responsibility of the Superintendence of Banks.
He says that the Monetary Law establishes the Central Bank as the entity responsible for carrying out the supervision and final liquidation of the payment systems, and interbanking market (Article 15). Thus, the Central Bank acts as a last-resort lender, given that the Central Bank is limited to monetary responsibilities.
On the other hand, the Superintendence of Banks is by law responsible for carrying out, with full autonomy, the supervision of financial entities to verify that they follow the law, all rulings, and any other provisions to cover risks, as established in Article 19 of the Monetary Law.
Jorge Prats explained that the responsibility of the Superintendence of Banks cannot be assumed by the Monetary Board, nor can the Monetary Board or the Central Bank instruct the Superintendence of Banks because of the autonomy granted to it by law.
The Baninter debacle is primarily attributed to the lack of timely implementation of the banking supervision controls, a situation which is now known to have escalated since September 2002.