Panama’s banking sector has formally rejected a legislative proposal seeking to impose new controls on interest rates. The Panama Banking Association (ABP) called for the complete overhaul of Bill 552 during a recent industry meeting in Panama City, arguing the plan would damage the country’s financial market.
Executive Director Carlos Berguido stated the association submitted its request to the National Assembly’s Commerce Commission, which is currently reviewing the proposal. The bill, introduced by legislator Ernesto Cedeño on March 17, 2026, aims to establish regulatory frameworks for bank lending and deposit rates.
Banking Sector Warns of Market Inflexibility
Berguido explained the association’s core objection centers on the potential for rigid controls. He argued that introducing caps or tying rates to external reference factors would prevent the natural movement of credit costs in a volatile economic environment. The banking executive emphasized that market flexibility remains crucial for a healthy financial system.
“Introducing this creates too much inflexibility in a market where credit costs are very volatile. Interest rates must have the flexibility to rise and fall and adjust to what happens in the market,” said Carlos Berguido, Executive Director of the Panama Banking Association. [Translated from Spanish]
The association’s position highlights a significant clash between regulatory intentions and industry practices. Bankers contend that mandated controls could distort lending, potentially restricting credit access for some consumers and businesses when underlying interest rate pressures rise.
Lawmaker Defends Bill for Consumer Protection
Bill proponent Ernesto Cedeño defended the legislation as a necessary step for consumer protection and systemic stability. He framed the initiative as a move to strengthen transparency, legal security, and balance in contractual relationships between banks and their customers. The goal, he said, is a fairer and more reliable banking system.
Cedeño countered claims that the bill overreaches. He asserted it fully respects the principle of economic freedom and contractual autonomy as recognized by the nation’s Political Constitution of the Republic of Panama. The legislator stated the proposal does not impose generalized price controls or limit banking activity but instead establishes minimum rules for transparency and proportionality.
“The initiative aims to contribute to a more just, stable, and reliable banking system,” said legislator Ernesto Cedeño. [Translated from Spanish]
This legislative debate unfolds against a backdrop of international economic uncertainty. Banking executives at the ABP meeting pointed to tensions from the Middle East conflict and rising global fuel prices as examples of the volatility they must navigate.
Panama Banks Report Strong 2025 Performance
During the same meeting, the Panama Banking Association highlighted the sector’s current strength. ABP Board Chairman Ernesto Boyd reported very positive results for the end of 2025, with overall system profitability exceeding 13 percent. He cited solvency, efficiency, and continued strengthening as key indicators.
Executives also addressed current monetary policy. They confirmed that banks have not yet increased interest rates specifically in response to the Middle East war. This statement aims to reassure the market and consumers about immediate stability despite global pressures.
The Commerce Commission now faces the task of reconciling these opposing views. Its analysis of Bill 552 will determine whether the proposal moves forward for a full Assembly vote, returns for revision, or is shelved entirely. The outcome will signal Panama’s regulatory direction for its crucial financial services sector.