La regulación bancaria en el Uruguay durante la industrialización dirigida por el Estado: entre la seguridad del sistema y el control de la expansión monetaria, 1938-1965

This paper analyses banking regulation in Uruguay during the period of state-led industrialization. We aim to fill a hole in the national economic historiography, which has paid scant attention to this topic, and to advance in consonance with recent developments in the Latin American historiography. The major legislative actions taken in regard to the private banking sector are identified, the motives for these actions are examined and their impact on private banking activity is evaluated. The research activities consisted primarily of reviewing the National Register of Laws and Decrees, the recorded sessions of both houses of Congress and the specialized national economic journals of the period, as well as of the construction of a database of banking activity during the period. Four major regulatory moments are discussed: in 1938 the first general banking law of the 20th century looked to strengthen the safety and soundness of the banking system; during the 1940s minimum reserve ratios were adjusted as a means of restricting monetary expansion; in the 1950s the rediscount mechanism was liberalized in order to control monetary policy and, to a much lesser extent, credit policy; finally, as a response to Uruguay's first major banking crisis of the 20th century, a new banking law was passed that looked to increase the safety and soundness of the system, implement greater control over bank assets and apply measures for directing credit towards strategic activities. In general, banking regulation appears to have focused on safety and soundness, and rather than aiming to direct financial resources towards productive activities, it tended to respond to monetary problems, such as inflation or scarcity of credit. At the same time, even though credit selectivity was an explicit goal of policy makers starting in the late-1940s, it was overshadowed by other problems of greater importance, the very problems that contributed to the collapse of the development model pursued during these decades.