Nicaragua - Banking and securities

The banking system, nationalized in July 1979, is under the supervision of the comptroller general. The National Bank of Nicaragua, established in 1912, has been government-owned since 1940. In 1979, the bank was reorganized to become the National Development Bank. The Central Bank of Nicaragua (Banco Central de Nicaragua), established in 1961, is the bank of issue and also handles all foreign exchange transactions. As of 1979, deposits in foreign banks were prohibited, but in May 1985, the establishment of private exchange houses was permitted. In 1990, legislation was passed that allowed for the establishment of private banks. There are no state-owned commercial banks in Nicaragua.

By 2002, there were at least seven private banks operating, after several mergers in the first few years of the new millenium. Three banks closed in 2000, and another was absorbed into another bank the following year. Banco de la Producción (BANPRO) assumed the performing loans in INTERBANK's portfolio, while the Central Bank took over control of the nonperforming loans. Banco de Finanzas (BDF) assumed BANCAFE's good loans in a similar deal. Also, Primer Banco Inmobiliario (PRIBANCO) merged with BANPRO, and Banco Mercantil (BAMER) merged with Banco de Crédito Centroamericano (BANCENTRO). The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $338.7 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $2.1 billion.

A small stock market began operations in the late 1990s.

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