The Dominican Republic (Spanish: República Dominicana is a sovereign state occupying the eastern five-eighths of the island of Hispaniola, in the Greater Antilles archipelago in the Caribbean region. The western three-eighths of the island is occupied by the nation of Haiti, making Hispaniola one of two Caribbean islands, along with Saint Martin, that is shared by two countries. The Dominican Republic is the second-largest Caribbean nation by area (after Cuba) at 48,445 square kilometers (18,705 sq mi), and 3rd by population with 10.08 million people, of which approximately three million live in the metropolitan area of Santo Domingo, the capital city.
A diversified and dynamic Dominican financial system began to develop in the post Trujillo era, when the private sector gained greater access to credit and new domestic institutions were created to meet growing credit demands. It was then that formally regulated financial institutions rose from 7 in 1960 to 78 in 1985. A poor macroeconomic climate plunged the financial sector into a crisis early in the 1980’s, however, increased government regulation -as part of a 1985 stabilization program- eased some of the system’s problems. And despite high inflation and unusually high interest rates, by the second half of the 1980’s there were more than 400 financial enterprises representing seven percent of the GDP in 1988.
The system, made up of 17 different types of institutions, included the Dominican Central Bank (BCRD, its acronym in Spanish); commercial banks, savings and loan institutions, private development financing companies, mortgage banks, state banks, and others. These institutions totaled 263 branch offices. Much of this growth involved consumer finance companies and larger financiers (the term in Spanish for these financial institutions), which underwrote medium-term and long-term loans for priority economic sectors.
Twenty-four commercial banks made up the core of the private financial system in 1989. Commercial banks controlled about 64 percent of the financial system’s total assets, and over 40 percent of commercial bank funds were deposited in one bank, the Reserve Bank (Banco de Reservas de la República Dominicana). Although it served as the main government fiscal agent, the Reserve Bank also operated as a commercial bank. Banks were largely Dominican-owned, especially after several foreign banks sold most of their portfolios to local banks in 1984 and 1985 because of the unfavorable economic climate. Nonetheless, Chase Manhattan and Citibank, from the United States, and the Bank of Nova Scotia, from Canada, maintained local operations in the late 1980s. All of the banks provided a full range of services, and offered checking accounts. The Superintendence of Banks, under the Secretariat of State for Finance, regulated the banks in conjunction with the Central Bank.
34 percent of the loans to the productive sectors favored manufacturing in 1987; followed by agriculture, 19 percent; services, 8 percent; and construction, 6 percent. The remaining loans were oriented to finance exports, imports, and consumer purchases.
Increases in the private-sector share of total domestic credit from 1984 were due to the growth of investments in the priority areas of assembly manufacturing and tourism despite tight credit conditions. The access to bank credit was generally dominated by large corporations, often irrespective of their credit worthiness or need for credit, mainly because of their superior “connections.” In addition to their assets in the domestic banking system, Dominicans held an estimated US$1 billion in accounts overseas, mainly in the United States.
The main sources of household finance in 1989 were 17 savings and loan associations and mortgage banks. Established since 1962, they represented 19 percent of the system’s financial assets and catered mostly to middle-income homebuyers, although they offered passbook savings, certificates of deposit, and collateralized loans as well. The National Housing Bank (Banco Nacional de la Vivienda–BNV) regulated the savings and loan institutions by imposing per-family lending ceilings. Fourteen mortgage banks, holding about ten percent of the system’s assets, served mostly upper income homeowners. The most prominent of these institutions was Banco Hipotecario Dominicano – BHD). Unlike the savings and loans associations, mortgage banks also financed the short-term needs of builders and medium-term and long-term commercial construction. Mortgage banks are regulated by both the Central Bank and BNV, but regulations imposed are less stringent than those applied to the savings and loan associations. Lower-income homebuyers obtain credit through Instituto Nacional de la Vivienda (National Housing Institute) and real estate finance companies (sociedades inmobiliarias).
The equivalents of private development finance companies -the financiers- controlled six percent of the national assets, and were instrumental in the financing of medium-term and long-term investment in priority sectors. Established in 1966, the number of financiers had grown from eight in 1970 to twenty-five by 1989. They issued stocks and funded bonds, guaranteed by government financial institutions, to mobilize capital in major development projects in agribusiness, industry, transportation, and tourism. In addition, they provided technical assistance to borrowers, and guaranteed the liabilities of others. Increased government regulation of the small financiers, especially in the area of currency speculation, forced many to close in the late 1980s.
The following played a relatively minor role in the financial system: BNV, providing some housing-related finance; Corporación Financiera Industrial, playing a smaller role than its name suggested, and Banco Agrícola (Agricultural Bank of the Dominican Republic or Bagricola by its acronym), which was an important creditor. Through its thirty branch offices, Bagricola covered small countryside farmers. The bank’s importance, however, declined early in the 1980s due to high unsettled debts, but it rebounded in the late 1980s through greater autonomy, and by mobilizing capital for the first time through savings accounts.
Other financial services were offered in the country through organizations that served the large informal sector. Two of these were the Dominican Development Foundation and the Association for Microenterprise Development that provided loans to microbusinesses and unincorporated businesses. Rural borrowers and savers were also served by long-standing and there were many money lenders. When the monetary authorities initiated its foreign exchange reform in 1988, however, some seventy exchange banks were forced to close. Fifty insurance companies, half of which were locally owned, underwrote policies in the late 1980s, under the supervision of the Superintendence of Insurance.
|Agriculture||Small grains, wheat, meat, maize, fruits.|
|Services (Including financial)||67.5% (2010 estimate)|
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The Stock Exchange of the Dominican Republic, or La Bolsa de Valores, came into existence from legislation that was passed in 1989, but actually did not begin formal operations until late 1991. Since that time the exchange has enjoyed exponential growth with regards to trading volume and financial sector activities. It is also one of the most active stock exchanges in Latin America. The BVRD operates Monday through Friday from 9:00 a.m. to 1:00 p.m.
Investors have been impressed with both the professionalism and phenomenal growth that has occurred over the last few years.
The primary activities of the exchange involve public sale of Commercial Paper and Bond instruments. Many investors have become aware of the returns offered in the Dominican Republic ~ and as a result have proven their confidence by helping the exchange reach new record trading volumes since its inception.
While some investors are disappointed that equities are not currently traded on the exchange, we believe that tremendous opportunities will be available once many of the government privatization initiatives move forward.
La Bolsa De Valores ~ Republica Dominicana is certainly also one of the most progressive institutions in the Caribbean. Plans are in the making for an electronic order entry system so the growing investor demand can be accommodated. The exchange tells us that this new system should be on-line at years end.
In addition, electronic links are being forged with some other exchanges, such as the Costa Rican Stock Exchange, so investors can truly have access to the world markets ~ from Santo Domingo.
The global economic slowdown in 2001, the events of
September 11, 2001, and the banking crisis in 2003 shattered the Dominican
Republic’s already weakened macroeconomic framework and jeopardized its growth
prospects. By honoring all deposits, including off-shore and off-balance sheet
exposure, of the failed banks, the government helped limit contagion in the
banking system. However, it placed a very large fiscal burden on the country,
particularly the Central Bank, which was severely de-capitalized. This added to
the urgency of re-capitalizing the Central Bank and strengthening the financial
sector, especially the regulatory institutions.
The World Bank’s strategic approach to supporting the financial sector during this troubled period included addressing the fundamental weaknesses in the financial system and encouraging medium- to long-term institutional and policy reforms. This Financial Sector Technical Assistance Loan was prepared during the banking crisis and was designed to support these medium-term institutional and market reforms.
The financial system has benefitted from the initiatives supported by the project in terms of improved performance and reduced risk of another crisis, which is reflected in significantly improved indicators in the banking system. For example, past due loans declined from 7.5 percent in 2005 to 1.7 percent in 2011, while the banking system’s capitalization rose from 8.8 percent to 9.7 percent. With this, the ability of the banking system to withstand external shocks has notably improved as demonstrated by its capacity to deal with the effects of the international financial crisis of 2008.
The pension system experienced strong growth during the project implementation period. Between 2005 and 2011, the size of the pension funds’ investment portfolio expanded at an average annual rate of 41.6 percent. If this trend continues, it will greatly increase the demand for investible securities thus providing greater opportunities for domestic companies to access the capital markets.
The new Real Time Gross Settlement System became operational in 2008 and has already produced very positive results in terms of greater market efficiency and reduced risk. Key benefits of the new system include:
Reduced fraud as the system applies rigorous validation standards to each transaction, plus regulators are engaged in ongoing surveillance of transactions.
Greatly reduced settlement time, as the transactions are recognized on a real time basis, thereby reducing the time from as long as 24 hours to only minutes.
Authorization of the national securities custodian to de-materialize securities in 2008, thus enhancing the liquidity and safety of securities transactions.
The project also supported the creation of a joint Central Bank-Banking Superintendence web-based portal that has notably improved the timeliness and quality of information available to these institutions. It also contributed to the introduction of a modern platform that allows the Ministry of Finance to manage the public debt in a more efficient manner.
Christopher Columbus landed on the Western part of Hispaniola, in what is now Haiti, on December 5, 1492, which the Taíno people had inhabited since the 7th century. The island became the site of the first permanent European settlement in the Americas, and the oldest continuously inhabited the city and the first seat of the Spanish colonial rule in the New World. After more than three hundred years of Spanish rule, the Dominican Republic people declared independence in November 1821. The leader of the independence movement José Núñez de Cáceres, intended the Dominican nation to unite with the country of Gran Colombia. However, once no longer under Spanish rule, the newly independent Dominicans were forcefully annexed by their more powerful neighbor Haiti in February 1822. After the 1844 victory in the Dominican War of Independence against Haitian rule, the country fell under Spanish colonial rule — the only nation in the hemisphere to do so after gaining its independence. The crown was ousted permanently during the Dominican War of Restoration of 1865. The Dominican Republic experienced mostly internal strife until 1916. A United States occupation lasted eight years between 1916 and 1924, and a subsequent calm and prosperous six-year period under Horacio Vásquez Lajara was followed by the dictatorship of Rafael Leónidas Trujillo Molina until 1961. A civil war in 1965, the country's last, was ended by U.S. military occupation and was followed by the authoritarian rule of Joaquín Balaguer, 1966–1978. Since then, the Dominican Republic has moved toward representative democracy and has been led by Leonel Fernández for most of the time since 1996. Danilo Medina, the Dominican Republic's current president, succeeded Fernandez in 2012, winning 51% of the electoral vote over his opponent ex-president Hipólito Mejía.
The Dominican Republic has the ninth-largest economy in Latin America and is the largest economy in the Caribbean and Central American region. Though long known for agriculture and mining, the economy is now dominated by services. Over the last two decades, the Dominican Republic has been standing out as one of the fastest-growing economies in the Americas - with an average real GDP growth rate of 5.4% between 1992 and 2014. GDP growth in 2014 and 2015 reached 7.3 and 7.0%, respectively, the highest in the Western Hemisphere. In the first half of 2016 the Dominican economy grew 7.4%.
Recent growth has been driven by construction, manufacturing, and tourism. On the demand side, private consumption has recently been strong, as a result of low inflation (under 1% on average in 2015), job creation, as well as a high level of remittances. The Dominican Republic has a vibrant national stock market, Bolsa de Valores de la Republica Dominicana (BVRD). The Dominican Republic's economic progress is exemplified by its advanced telecommunication system and transportation infrastructure. Nevertheless, unemployment, government corruption, and inconsistent electric service remain major Dominican problems. The country also has "marked income inequality. International migration affects the Dominican Republic greatly, as it receives and sends large flows of migrants. Mass illegal Haitian immigration and the integration of Dominicans of Haitian descent are major issues. A large Dominican diaspora exists, mostly in the United States. It contributes to the Dominican Republic's development, sending billions of dollars to Dominican families in remittances.
The Dominican Republic is the most visited destination in the Caribbean. The year-round golf courses are among the top attractions on the island. A geographically diverse nation, the Dominican Republic is home to both the Caribbean's tallest mountain peak, Pico Duarte, as the Caribbean's largest lake and point of lowest elevation, Lake Enriquillo. The island has an average temperature of 26 °C (78.8 °F) and great climatic and biological diversity. The country is also the site of the first cathedral, castle, monastery, and fortress built in all of the Americas, located in Santo Domingo's Colonial Zone, an area declared as a World Heritage Site by UNESCO. Music and sport are of great importance in the Dominican culture, with Merengue and Bachata as the national dance and music, and baseball as the favorite sport.
Victor Franklin Banks
The Dominican peso is the currency of the Dominican Republic . Its symbol is "$", with "RD$" used when distinction from other pesos (or dollars ) is required; its ISO 4217 code is "DOP". Each peso is divided into 100 centavos ("cents"), for which the ¢ symbol is used. It is the only currency that is legal tender in the Dominican Republic for all monetary transactions, whether public or private.
The first Dominican peso was introduced with the country's independence from Haiti in 1844. It replaced the Haitian gourde at par and was divided into 8 reales. The Dominican Republic decimalized in 1877, subdividing the peso into 100 centavos. A second currency, the franco, was issued between 1891 and 1897 but did not replace the peso. However, in 1905, the peso was replaced by the U.S. dollar , at a rate of 5 pesos to the dollar. The pesooro was introduced in 1937 at par with the U.S. dollar, although the dollar continued to be used alongside the peso oro until 1947.
When the peso oro was first introduced as a local coinage in 1937, no paper money was made and US notes continued to circulate as the U.S. dollar was officially the national currency. Only in 1947 were the first peso oro notes issued by the Central Bank in denominations of 1, 5, 10, 20, 50, 500, and 1000 oros, though the latter two denominations were rarely used. These notes were printed by the American Bank Note Company, a private printing, and engraving firm. Though US notes were always acceptable in exchange, they were gradually withdrawn from circulation. In 1961, low-value notes were issued in denominations of 10, 25 and 50 centavos to help compensate for the value of silver in coins surpassing face value and the resulting coin shortages. Following the demise of Trujillo, all banknotes afterward dropped references to the capital city Ciudad Trujillo which had reverted to its old name, Santo Domingo .
Banknotes currently in circulation are 50, 100, 200, 500, 1000 and 2000 pesos oros. The 10 and 20 peso denomination bills have been replaced with 10 and 25 coins respectively. In 2010, a new 20 pesos oro polymer banknote was released. Limited editions of the 500 and 2000 peso oro notes were issued for the 1992 500th anniversary of the discovery of the Americas and year 2000 millennial celebrations, respectively, but as of 2005 not many of these remain in circulation. A 5000 pesos note has been considered before but not made.
All current banknotes carry the phrase "Este billete tiene fuerza libertoria para el pago de todas las obligaciónes públicas o privadas". Literally translated, (Spanish: This bill has the liberatory strength to be used as payment for all public or private obligations).
On July 1, 2010, Banco Central de la República Dominicana has issued a 20-peso oro banknote that is similar to the previous paper issue, but is now printed on a polymer substrate
In 2011, the Banco Central de la República Dominicana has announced that all banknotes dated 2011 will be denominated in "Pesos Dominicanos" instead of "Pesos Oro". This decision was made in response to a mandate of the Constitution of the Dominican Republic on January 26, 2010,
On October 1, 2014, the Banco Central de la República Dominicana plans to issue a new family of notes with new designs and new security features.
|National Song||"Himno Nacional"|
|Currency||Dominican peso (DOP)|
|GDP / GDP Rank||161.838 Billion USD|
|GDP Growth Rate||7 Percent|
|GDP Per Captial||$16049.463 (PPP)|
< 1.0% Muslims
< 1.0% Hindus
< 1.0% Buddhists
< 1.0% Jews
< 1.0% Other Religions
President – Danilo Medina
|Website||Go to the web|
|Public Debt||34.437 Percent|
|Unemployment Rate||14.363 Percent|
|Labor Force (Occupation)||-|