The Central Bank of the Republic of Colombia, through its financial stability report, stated that the country’s financial system is in a situation of “patrimonial solidity and adequate liquidity”.
“The multiple blows that the economy is currently facing, as a result of the drop in the price of oil and the appearance of a global pandemic, find the Colombian financial system, in aggregate terms, in a situation of financial strength and adequate liquidity,” he said. the institution.
However, the entity recognized that the sudden change caused by macroeconomic conditions generated the appearance of vulnerabilities for Colombian financial stability in the short term, which is why “close and continuous” monitoring by the economic authorities becomes necessary.
The main vulnerability is the response of credit and portfolio quality to a potential “temporarily extreme” macroeconomic situation, in a context of reductions in net interest margins that have led to a decrease in business profitability.
Additionally, as a consequence of the greater uncertainty and risk aversion, occasional problems could be observed in the distribution of liquidity between agents and financial markets.
“In terms of local markets, in recent weeks there have been spikes in the volatility of public and private fixed income consistent with the behavior of international markets and that had an important impact on the liquidity of those instruments,” the document stated.