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After several attempts, in June of 1880, the Government created the Banco Nacional to act as its banker and to promote public credit. Its role as banker consisted of providing the Government with services of allocation of public or Treasury funds, credit extension, collaboration in obtaining both internal and external loans as well as the management of Government Securities. Furthermore, the Banco Nacional was responsible for issuing the national currency. However, in 1894, the Congress liquidated the National Bank due to registered excesses in the currency issue. Years later, the Banco Central de Colombia was created, which functioned between 1905 and 1909, until it too was liquidated for the same reasons.
The First World War brought in its wake severe economic and financial difficulties for Colombia that were not resolved with the advent of peace. During the first two decades of the 20th Century the prospects of Colombian banking institutions were not promising due to the existing monetary disorder: currency was issued without control and bank reserves were dispersed. An additional aggravation to this situation was the lack of a formal governmental system of guarantees and backing for the banks.
This situation precipitated the economic crisis of the years 1922 and 1923, which clearly showed the scarcity of money in circulation. Therefore, the need to provide currency and credit with solidity and stability by means of a solid and consistent central bank became imperative.
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In March of 1923, President Pedro Nel Ospina commissioned a group of experts, headed by Prof. Edwin Walter Kemmerer. This commission later became known as the Kemmerer Commission. The first action of the commission was to study Colombia’s economic reality by means of contact and discussion with business associations, agricultural societies and regional officials.
Subsequently, the Commission began to analyse the relevant parts of the laws passed the previous year, as a basis for the elaboration of the organic statutes of the entity that was about to be created. For this purpose it was not necessary to replace existing standards and norms of other economies or to pursue total innovation.
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| Creation of
the Banco de la República
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The Banco de la República was established as the Central Bank of Colombia on the 25th of July 1923 by means of Law 25. The Bank was organised as an anonymous society with a starting capital of 10 million in gold, of which the Government provided 50% and foreign and national commercial banks as well as some private individuals contributed the remainder. This entity was exclusively entrusted with the faculty of issuing Colombian legal tender, administrating the country’s international reserves, acting as banker to the Government and serving as a last resort moneylender. The Bank’s Board of Directors, composed of 10 members consisting of representatives both from the private and public sectors, was entrusted by Law 25 with the exercise of regulatory and monetary controls with strict adherence to the parameters of financial orthodoxy. The Board was also given the responsibility of establishing the discount rate and intervening to control interest rates.
The Banco de la República plays a fundamental part in the economic and institutional organisation of the country. With the passage of time, this institution has undergone important changes, and has adapted itself to serve an economy in a permanent process of growth and development.
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A central bank is the institution that issues and administrates legal currency and exercises the function of banker of banks. Furthermore, it controls the country’s monetary system (currency), credit system (interest rates) and foreign exchange system (foreign exchange rates). Its principal functions include:
i. To act as State bank;
i. To control the issue of legal tender;
i. To receive allocations of credit and provide loans to commercial banks and the Government;
iv. To manage and direct the country’s monetary (inflation controls) and financial policy; and,
v. To carry out currency transfers with other countries of the world, amongst other functions.
In 1922, the Colombian Congress passed Law 30 thereby authorising the Government to promote and create a bank with the functions of currency issue, draft, deposit and discount - with the immediate goal of rectifying the precarious monetary and credit situation that the country had suffered since its inception as a Republic.
Due to the need for access to external credit it was necessary to commission a delegation of foreign experts to provide the country with advice as regards the organisation of its monetary and banking structure.
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In 1998 the Bank adopted a new corporate image and modified its logo by re-adopting the traditional design of Mariana of Liberty, the original emblem at the time of the institution’s creation in 1923. The Mariana is an allegorical symbol of liberty inspired by the French Revolution, that according to some represents the people and according to others, represents the Republic. Colombian admiration for the French Revolution is registered in our history at the time when The Predecessor, Antonio Nariño, translated and published “The Rights of Man”. A few years after achieving independence, a curious adaptation of the Mariana’s figure, adorned with native feathers, was found on some of the first coins produced out by the patriots. After 1837, the Mariana recovers its traditional aspect and becomes a frequently used element in banknote and currency design. At the beginning of the 20th century, when the Third French Republic was consolidated and republican style was observed in our architecture, it did not come as a surprise that the founders chose the name of Banco de la República to baptise the new central bank created in Colombia. Neither is it surprising that the Mariana symbol was adopted in the Bank’s emblem.
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“¿Qué es el Banco de la República?” (“What is the Banco de la República?”
Brochure in PDF format containing information about the Bank’s history, functions, attributions and cultural activities.
El
Banco de la República-Antecedentes, Evolución
y Esctructura. Banco de la República, Departamento Editorial, Bogotá, 1990.
(“The Banco de la República - Background, Evolution and Structure”). Banco de la República, Editorial Department, Bogota, 1990.
“Introducción al Análisis Económico. El caso colombiano”. 2a. ed. Revisada, Banco de la República, Ed. Siglo del Hombre Editores, Santafé de Bogotá, 1997.
(“Introduction to Economic Analysis. The Case of Colombia”.) Second Edition. Revised Banco de la República. Editor: Siglo del Hombre Editors, Santafé de Bogota, 1997.
“Historia del Banco de la República 60 años”. Fabio Gómez Arrubla, Talleres Gráficos, Banco de la República, Bogotá, 1983.
(“History of the Banco de la República: 60 years”.) Fabio Gómez Arrubla, Talleres Gráficos, Banco de la República, Bogota, 1983. |
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