Publication: Uruguay : Financial Sector Review
Date
2000-11-15
ISSN
Published
2000-11-15
Author(s)
World Bank
Abstract
The study reviews Uruguay's
financial sector, identifying a well-developed banking
sector, which reflects off-shore banking growth stimulated
by regional macroeconomic instability, and by the
country's strict national banking laws. By contrast,
the country's capital market is underdeveloped, with a
market capitalization of less than one percent of GDP,
compared to the average ten percent in emerging markets.
Similarly, the contractual savings sector, including
pension/mutual funds, and insurance companies, is highly
incipient. The small open economy has significant
implications for its financial sector strategy, since its
domestic economy is not large enough to sustain a domestic
financial sector, particularly considering increased border
trade in financial services, via electronic banking, and
securities trading. Thus, its alternative may be to become
highly competitive in banking services, including exporting
these services. Based on substantiated evidence, it is
suggested that the comparative advantage of Uruguayan banks
is gradually eroding, but should it become competitive, the
country could export some banking services, provided it
explores setting up a regional stock exchange within
MERCOSUR, which may well improve liquidity, rather than
revive local exchanges; improve the constrained private
participation (resulting from a preponderant State role);
and, strengthen regulatory, and supervisory framework.
Link to Data Set
Citation
“World Bank. 2000. Uruguay : Financial Sector Review. © Washington, DC. http://hdl.handle.net/10986/14458 License: CC BY 3.0 IGO.”