The Central Bank of Ecuador, founded as a private bank in 1927, was declared an organ of the state in 1948 by the Monetary Board. The Central Bank issues and stabilizes currency, holds and manages foreign-exchange reserves, issues import and export permits, and regulates international transactions. The Monetary Board supervises government monetary, financial, and exchange policies. In 2002, there were 22 private banks operating in Ecuador. The five largest banks included Banco Popular, Filanbanco, Banco del Progreso, Banco del Pichincha, and Banco del Pacifico.
The government-owned National Development Bank (BNF) was founded in 1928 to provide credit for agricultural and industrial development. Other major government-owned financial institutions are the Bank of the State (BEDE), the National Finance Corporation (CFN), the Ecuadorian Housing Bank (BEV), and the Development Bank of Ecuador (BEDE).
On 1 December 1996, president Abdalá Bucaram anchored the fully convertible sucre to the dollar. In July 1997 the sucre was pegged at a fixed exchange rate of 4 new sucres (4,000 old sucres) per dollar. Bucaram was dismissed from the government for incompetency, and his plan was abandoned by the Alarcon government, which introduced a currency auction system to minimize fluctuations between the sucre and the dollar. The sucre depreciated by almost 200% in 1999. In 2000, President Mahuad decided to dollarize the economy at 25,000 sucres per dollar. He was also ousted in a coup d'etat on an anti-dollarization platform, but the incumbent President Naboa went ahead with the plan anyway. IMF-backed recovery plans for 2001 included massive amounts of foreign assistance. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $1.9 billion. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $4.9 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 16.44%.
Trading in securities is relatively minor. Ecuador has two stock exchanges, one in Quito and the other in Guayaquil, both established in 1969. Market capitalization of the Guayaquil Stock Exchange was $1.4 billion in 2001, when trading value was only $10 million. Purchase and sale of government and some private securities are functions of the National Financial Corp., which, along with several hundred business people, owns the two stock exchanges. This autonomous agency, founded in 1964, deals in mortgage bonds issued by banks for agricultural and industrial development and in general seeks to mobilize funds for technical assistance to industry.