Honduras - Banking and securities

In 1950, the Central Bank of Honduras (Banco Central de Honduras), the sole bank of issue, was established to centralize national financial operations and to replace foreign currencies then in circulation. In 2002, there were 22 commercial banks in Honduras with an estimated $3.4 billion in assets. In addition, there are some 150 non-bank financial institutions, many of them associated with the major banks. The Banco Atlántida, the most important commercial bank, accounts for over one-half of the total assets of private banks. US banks play a significant role in the commercial system: the Atlántida is affiliated with Chase Manhattan, and the second-largest commercial bank, the Banco de Honduras, is affiliated with Citibank of New York.

The government-controlled banks, including the National Development Bank, the National Agricultural Development Bank, and the Municipal Bank, provide credit for development projects. The National Development Bank extends agricultural and other credit—mainly to the tobacco, coffee, and livestock industries—and furnishes technical and financial assistance and other services to national economic interests. The Municipal Bank gives assistance at the local level.

In 1990, the Central Bank devalued the lempira and let it float freely until 1994, when a currency auction was created. The year of 1995 saw the Financial Sector Reform Law, which created a modern Banking Commission. Elements of Central Bank reforms in 1997 included the abolition of the government's right to borrow at below-market rates of interest. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $800.6 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $3.3 billion.

In 1990, a stock exchange opened in San Pedro Sula to raise short-term bond finance for local businesses.

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