International Financial Hub
Panama as an International Financial Hub
The combination of robust regulation, a well-developed financial structure, and the integration of advanced technologies keeps Panama in a strong position in the international financial arena. Embracing new technologies and recognizing the need to change not just technology but also processes ensures that Panama remains a robust and dynamic financial center in the region.
Characteristics of the Panamanian Financial System:
The Panamanian economy is characterized by its banking monetary system, using the U.S. dollar as the common currency. It operates without a central bank and is heavily connected to the global economy. The financial system structure includes banks, securities firms, pension funds, insurance companies, cooperatives, among others, accounting for 7.31% of the GDP in 2021, with total assets amounting to $148,218 million. Panama’s international banking center operates as an intermediary system without a last-resort lender or deposit insurance institution. Main banking activities occur in various segments, including accepting bank deposits, retail banking, commercial and corporate lending, and corporate finance. The sector is regulated by a supervision model with a separate supervisory entity for each financial market, coordinated within the Financial Coordination Council (CCF). The Superintendency of Banks of Panama is responsible for regulating and supervising various financial entities.
Modernization and Digital Transformation:
Experts highlight the need to invest in digitalization, both in customer interactions and internal processes. While some banks have efficient and user-friendly client interfaces, internal operations and processes still require significant improvement. Procedures like loan granting and financial solvency analysis are still slow and rely on archaic mechanisms compared to North American or other Latin American banks.
Nonetheless, it should be noted that the Panamanian financial system has maintained remarkable macroeconomic stability, without any systemic banking crisis attributable to intrinsic imbalances in the banking system. The simultaneous operation of international and local banks allows for significant competitiveness and efficiency. Reflecting its international reach, Panama had 66 banks supervised by the superintendency of banks for 4 million inhabitants in 2023. By comparison, using the same criteria and including neobanks, France had 73 banks at the same date.
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