Nicaragua’s Banking System Faces State Control Overhaul

Nicaragua's government is poised to take control over its banking system by appointing private bank leadership. A new bill proposed by President Ortega would allow the national regulator to dissolve banks by decree. This marks increased state control, following past legislation ignoring international sanctions.

Nicaragua's legislature is gearing up for a crucial vote on a bill that proposes a major overhaul of the country's banking system, effectively granting the state significant control. If passed, this legislation, introduced by President Daniel Ortega, would empower the state to appoint leadership at private financial institutions.

This sweeping measure would also enable the national banking regulator to dissolve or liquidate banks by decree, signaling increased state influence over the financial sector. The proposal follows last month's legislative move requiring banks to sidestep sanctions against local Nicaraguans, further tightening state control.

Critics, including economist Marco Aurelio Pena, argue that the bill distorts market dynamics, emphasizing that there is a clear difference between regulation and administration. With the proposal expected to pass swiftly through the unicameral legislature, it could soon become law upon publication in the national gazette.

(With inputs from agencies.)