The Chamber of Deputies has passed the proposed “Programa Excepcional de Prevencion del Riesgo para las Entidades de Intermediacion Financiera” program for the prevention of risk for the financial intermediary entities. Despite vigorous debate, the deputies granted urgent approval of the first reading of the proposed law, which seeks to create a fund for the channelling of public and private money, with the aim of protecting depositors and preventing systemic risk, capable of affecting the payment system and the provision of basic financial services. The general purpose is to strengthen the Dominican financial system and restore confidence lost as a result of the banking scandals of 2003. The second reading by the Chamber is scheduled for this afternoon. The risk prevention law is also seen as essential factor for the resumption of the International Monetary Fund agreement.
The banking sector, while broadly supporting the proposed law, is asking to be more involved in its design, reports El Caribe newspaper. Jose Manuel Lopez Valdez of the Dominican Commercial Banking Association (ABCRD) says that the monetary authorities should have less discretionary power, and that the precepts of the new law should be in keeping with the updated monetary and financial legislation.
The Association of Young Entrepreneurs (ANJE), also believes that the proposed law awards too many special powers to the monetary authorities, saying that these powers need to be tempered by fewer discretionary rights, and that above all the monetary authorities should not be able to make unilateral changes to procedures once the law is in place.
This morning (Friday) the Congressional finance committee is due to meet with representatives from the National Business Council (CONEP) and ANJE, among others, to discuss the law in advance of the second debate that will pass it into law.
The proposal has so far had almost unanimous support, including that of opposition party PLD. In yesterday’s vote only two deputies voted against, while 128 voted in favor, with no abstentions. El Caribe’s main editorial says that the law should be approved “swiftly, but without haste,” and carefully studied carefully for flaws. The newspaper cites the warning from the private sector that the law may put too much power in the hands of the monetary authorities. It would be better to delay it for a couple of days and listen to the voices of the private sector, continues the writer, than to suffer the consequences of a badly thought-out piece of legislation. “These days, it is better to be cautious.”