Guatemala

Global Financial Regulations 2022

Financial Regulations In Guatemala

Guatemala has been ravaged by the COVID-19 pandemic, which drove a 1.8% contraction in GDP in 2020, aggravated income inequality and poverty, strained the healthcare system, highlighted political corruption and led to unrest.

Country Overview

Guatemala has been ravaged by the COVID-19 pandemic, which drove a 1.8% contraction in GDP in 2020,1 aggravated income inequality and poverty, strained the healthcare system, highlighted political corruption and led to unrest. Although the Guatemalan economy is the largest in Central America, it is the fifth poorest in Latin America and the Caribbean,2 and socioeconomic inequalities often fall along ethnic and geographic lines. Although the International Monetary Fund predicted a 4.5% GDP growth in 2021,3 the advent of the Delta variant lends uncertainty to the state’s fragile recovery. Summer 2021 brought the worst COVID-19 surge yet to Guatemala, which declared a state of emergency as it recorded over 4,000 deaths per day.4

Guatemalan regulators must spearhead further digitalization efforts in addressing persistent inequalities, securing the post-pandemic recovery and strengthening the economy. Although the state has made progress in expanding digital access, smartphone ownership is prohibitively expensive for many households,5 and internet penetration is around 65%.6 Fintech could be key in onboarding new customers, making banking more convenient and accessible, and spurring on cheaper and more competitive digital solutions across the banking sector. Fifty-six percent of Guatemalans are unbanked,7 and in 2017, only 13.26% of Guatemalans had a credit card.8

The 2021 digital agenda focuses on a possible digital quetzal and the digitalization of government services. Alongside investments in digital infrastructure and innovative technologies, Guatemalan regulators must ensure that digital transformation does not exacerbate data protection concerns. The state does not have a national data protection framework, and in 2020, privacy alarms were raised regarding a contact tracing app used to collect and store users’ geolocation data.9

Financial Regulatory Authorities

The Bank of Guatemala (Banguat) is Guatemala’s central bank.

The Superintendency of Banks (SIB) is the primary financial services regulatory for the country of Guatemala. The Bank issues legislative decrees and standards aimed at increasing financial inclusion and protecting consumers.

Policy, Laws and Regulations

Law on the Simplification of Procedures, 31 August 2021

The Law on the Simplification of Procedures, published 01 June 2021 in the Official Gazette, aims to modernize executive branch administrative management through the simplification and digitalization of administrative procedures. It also seeks to “facilitate interaction between individuals or legal entities and government agencies.”10 The Law, which went into effect 31 August 2021, requires public institutions to utilize an advanced electronic signature in the issuance of resolutions and certifications, and prohibits public institutions from requiring that physical documents be uploaded if they bear an advanced electronic signature. Public institutions must also provide easy access to public records, which shall be stored in electronic databases, and administrative procedures must be conducted electronically, and be electronically traceable.11

Investigation Phase on Digital Quetzal, August 2021

Since early 2021, a technical team has been investigating the possible development—including technical and legal frameworks—of a central bank digital currency (CBDC). The digital quetzal would complement, rather than replace, physical notes and coins. Central bank president Sergio Recinos stated, “We are in the investigation phase. Then a platform will be sought (software and hardware, it could be blockchain technology), a pilot test will be carried out and finally the issuance will be carried out.”12 Recinos noted that a main challenge in the issuance of a digital quetzal would be internet access, especially in rural areas. According to ex-president of the central bank María Antonieta del Cid, a CBDC would boost financial inclusion, help to stabilize the payments system and foster discipline and competition in the market.13

On 24 June 2021, Recinos issued a warning on cryptocurrency investments during a news conference, stating, “There is a big difference between a digital currency issued by a central bank and a cryptocurrency issued by private actors that doesn’t have government backing or oversight.”14


Reference:

1. “The World Bank in Guatemala.” The World Bank. https://www.worldbank.org/en/country/guatemala/overview

2. “The World Bank in Guatemala.” The World Bank. https://www.worldbank.org/en/country/guatemala/overview

3. “Guatemala.” International Monetary Fund. https://www.imf.org/en/Countries/GTM

4. “Guatemala declares state of emergency over Delta Covid surge.” The Tico Times, 14 August 2021. https://ticotimes.net/2021/08/14/guatemala-declares-state-of-emergency-…

5. Drees-Gross, Franz and Pepe Zhang. “Less than 50% of Latin America has fixed broadband. Here are 3 ways to boost the region's digital access.” World Economic Forum, 21 July 2021. https://www.weforum.org/agenda/2021/07/latin-america-caribbean-digital-…

6. “Latin American Economic Outlook 2020 : Digital Transformation for Building Back Better—Guatemala.” OECD iLibrary, https://www.oecd-ilibrary.org/sites/af413327-en/index.html?itemId=/cont…

7. “Digital aid becomes lifeline for unbanked Guatemalans during pandemic.” Visa, 11 August 2021. https://usa.visa.com/visa-everywhere/blog/bdp/2021/08/10/digital-aid-be…

8. “Share of adult population with credit cards in Guatemala between 2011 and 2017, by gender.” Statista. Statista Research Department, 02 July 2021. https://www.statista.com/statistics/865992/credit-card-ownership-rate-g…

9. “Investigation reveals serious concerns over Guatemala COVID-19 app.” Global Witness, 14 May 2020. https://www.globalwitness.org/en/press-releases/investigation-reveals-s…

10. “Ley para la simplificación de requisitos y trámites administrativos – Decreto 5-2021.” Inbers, 26 June 2021. https://www.inbers.com/ley-para-la-simplificacion-de-requisitos-y-trami…

11. del Valle, Luis Pedro and Marco Tulio León. “The law for the simplification of administrative requirements and procedures was approved.” Lexology, 28 July 2021. https://www.lexology.com/library/detail.aspx?g=0743a65d-27af-47a3-b2b3-…

12. Curruchich, Selvyn. “Preparan camino del quetzal digital.” Diario de Centro América, 03 August 2021. https://dca.gob.gt/noticias-guatemala-diario-centro-america/preparan-ca…

13. Curruchich, Selvyn. “Preparan camino del quetzal digital.” Diario de Centro América, 03 August 2021. https://dca.gob.gt/noticias-guatemala-diario-centro-america/preparan-ca…

14. McDonald, Michael. “Guatemala Central Bank Weighs Launch of its Own Digital Currency.” Bloomberg Law, 24 June 2021. https://news.bloomberglaw.com/banking-law/guatemala-central-bank-weighs…


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Last updated: November 2021