The President of Ecuador, Rafael Correa, who was re-elected in last February, is currently on pledges to radicalize socialist push and as a result, he is proposing to modernize market of this Latin American country. Correa, a former economics professor who holds a Ph.D. degree from the University of Illinois is currently 50 years old and he has sent legislation to the Congress on 5th April to integrate two security exchanges of the country. Apart from that, the combined security exchange will act as a for-profit entity. The content of the bill was confirmed by a Congressional Press Officer.
With the bill, a regulatory framework will also be created under which the financial firms will be allowed to set up investment banks and also mutual funds. Thereby, it will be easier for the medium and small companies to raise financing on the exchanges.
In a letter sent to the Congressional President Fernando Cordero, Correa stated that while the securities market has long been seen as a classical tool of capitalism and only for the large economic groups, this market can ultimately become an ideal mechanism for democratizing the companies. The letter was accompanied by the bill and it also stated that the exchange market is one of the most important segments of Ecuador’s economy.
According to the Press Office of Economic Policy Minister of Ecuador, Jeanette Sanchez, the minister is not ready to make any sort of comment on this matter right at this point of time.
Correa earlier made promises to radicalize the country with free education and health care. Incidentally, one-third of the 15.4 million population of this country lives in poverty. Correa describes himself as a socialist revolutionary and he dubbed the foreign bondholders as true monsters in 2008, when Ecuador defaulted on $3.2 billion of debt.
More than 2 years ago, the Economic Policy Ministry of Ecuador promised to create a bill merging the two exchanges. However, since then, the bill has continuously been delayed amidst the several ministerial changes introduced in the cabinet of the President. Incidentally, the two security exchanges namely Bolsa de Valores de Guayaquil and Bolsa de Valores de Quito operate almost independently at this point of time.
The new market regulator will be accountable to the President and can create special exchange for holding listings of small and medium companies with fewer rules.