The Banco de la Republica, Colombia’s central bank, is one of the most important economic institutions in the country.
It is responsible for promoting the stability and effective working of the Colombian economy by supervising Colombia’s banking activity and managing the country’s money supply.
The bank says its key functions are:
Functioning as banker to Colombia’s banks and government
Formulating Colombia’s interest rate policy
Controlling printing of the Colombian peso
Regulating peso exchange rate
These functions are invested in the Bank by the Colombian government, meaning its decisions should be made independent of political influence and purely in the best interests of the Colombian economy.
The current governor of the Banco de la Republica is economist and business administrator, Jose Dario Uribe.
Almost a century of central banking
Banco de la Republica was set up in 1923, as a measure to help Colombia pull itself out of the financial crisis that followed the First World War. Its creation followed the failure of at least three previous attempts to establish a central bank.
The law that invested in the bank the powers to carry out its functions also created the Board of Directors, whose main role is to analyze the factors affecting the economy to determine the optimal level for the central bank’s interest rate.
Central bank rate hikes generally make it more expensive to borrow and this usually means people are less likely to spend freely. This consequently limits the rate of inflation, the increase in price of goods and services over time.