Foundation
The Central Bank of Ecuador is the organization created to meet these goals, within a patchwork of reforms of the Ecuadorian economy advocated by the military and civilians who supported Julian ideas. However, as the exchange rate and monetary regime are extremely sensitive in a small open economy like Ecuador's, the proposal had to evolve and overcome the inertia of social sectors uninterested in progress of that nature. An intermediate step was the creation of the Central Fund of Issue and Redemption on June 26, 1926, which oversees debt repayment and temporarily authorizes the circulation of banknotes.
On October 18, 1926, President Isidro Ayora declared that banks authorized to issue banknotes must hand over to the Central Fund specified quantities of gold and silver which, in total, amounted to ten million six hundred thousand sucres. Meanwhile, the mission headed by E. W. Kemmerer prepared a comprehensive economic overhaul, which modernised Ecuador's financial practices. Kemmerer was chosen for this task as he had successfully performed similar tasks in other countries in South America.
On February 11, 1927, the Kemmerer mission presented their findings to the Government Bill of the Central Bank of Ecuador, together with an explanatory memorandum. They suggested a corporation licensed for 50 years to issue money, discounted at a fixed rate, become a repository of government and member banks, manage the foreign exchange market and serve as fiscal agent for the country as a whole. Because the functions of the new institution were "closely linked to the sovereign rights of the Government and the public interest, the Government was asked to participate in his administration.
On March 12, 1927 the President Isidro Ayora enacted the Organic Law of Central Bank of Ecuador (Official Register No. 283). The preparation of the functioning of the new institution was in charge of an Organizing Committee, appointed by himself Ayora.
On 3 June 1927 Ecuador approved the statutes; they negotiated between the two agencies, and overcame difficulties between the Central Fund Release and the new institution finally on August 10, 1927 the Central Bank of Ecuador opened its doors. On 25 August 1927, Main Branch opened in Guayaquil.
Read more about this topic: Central Bank Of Ecuador
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