Ecuador lawmakers push reforms to broaden financial inclusion and interest‑rate rules

The Economic and Tax Regime Commission of Ecuador's National Assembly is reviewing a reform to the Organic Law of the Monetary and Financial Code. The proposal seeks to expand formal credit access by introducing a special inclusive interest‑rate regime for borrowers without credit histories or with past arrears, allowing rates above the ceilings currently set by authorities.

Around eight in ten Ecuadorians now rely on informal lenders, a situation the reforms aim to mitigate. Critics argue that strict rate caps push risky borrowers toward informal sources that charge exorbitant rates. Some suggest that fully deregulating interest rates would let banks price risk appropriately, potentially raising short‑term rates but increasing overall access, competition, and market capital. The discussion also calls for measures to attract foreign banks, remove the tax on foreign‑currency outflows, and strengthen market competition.

If adopted, the changes could significantly increase the number of citizens served by formal financial institutions, though the long‑term impact on interest‑rate levels remains debated.