Central Bank of Paraguay oversight urged amid loss deferral

Economists are calling for increased supervision by the Central Bank of Paraguay (BCP) regarding the accounting deferral of banking losses. Experts note that while deferring losses does not necessarily cause immediate harm to depositors or the credit market, it does not eliminate the underlying economic risk; rather, it merely modifies the timing of when those losses are recognized.

Jorge Garicoche, an economist at the consultancy Mentu, emphasized the need to distinguish between the accounting treatment of losses and a bank's actual economic capacity to absorb them. He also raised concerns regarding transparency, noting that the mechanisms and timelines granted for such regulatory facilities have been inconsistent across different bank merger processes. Currently, details regarding these resolutions are often found in notary deeds or financial reports rather than through direct communications from the regulator.