COSEDE issues the operational manual for the financial Liquidity Fund

The Deposit Insurance, Liquidity Fund, and Private Insurance Fund Corporation (COSEDE) approved and issued the Operating Manual of the Liquidity Fund Trust for Private Financial Sector Entities, through Resolution No. COSEDE-COSEDE-2026-0047-R, issued in Quito on August 21, 2026. The instrument was published in Supplement No. 364 of the Official Registry on Tuesday, September 8, 2026, spanning 119 pages, and repeals resolution COSEDE-COSEDE-2025-0035-R of May 7, 2025.

The resolution, electronically signed by Mgs. Esteban Felipe Garces Salvador, Acting General Manager of COSEDE, comprehensively updates the procedures of the trust that acts as the lender of last resort to cover liquidity deficiencies of private financial entities. The manual is of mandatory application for COSEDE, the Central Bank of Ecuador (BCE), in its capacity as fiduciary administrator, and the National Financial Corporation, as the collateral fiduciary administrator.

Regulatory Framework and Background

The regulation is based on the Organic Monetary and Financial Code (COMF), which in articles 79, 80, 87, and 91 assigns the administration of the Liquidity Fund and the approval of operating manuals to COSEDE and its General Management. Article 333 of the COMF empowers the Fund to act as the lender of last resort, and article 334 orders the establishment of independent trusts for the private and popular and solidarity financial sectors.

The trust was established on April 28, 2016, before the Twenty-Ninth Notary of the Quito canton, and its manual has been reformed on multiple occasions since then. The update aligns with Resolution No. JPRF-F-2025-0164 of the Financial Policy and Regulation Board, in effect since October 6, 2025, and with the reformed trust establishment contract.

Collection of Contributions and Funding Goal

The manual regulates the calculation, collection, and reimbursement of the monthly contributions that private financial entities make to the trust. The calculation is performed on the 16th day of each month based on the daily average of deposits subject to reserve requirements, and the contribution goal increases every January until it reaches the equivalent of 10% of the deposits subject to reserve requirements.

• The monthly contribution is calculated by multiplying the daily average of deposits by the current contribution percentage.
• Each entity’s fiduciary right integrates the monthly contribution, the initial balance of the FLSFE, other contributions, and capitalized returns.
• When the fiduciary right exceeds the goal, a surplus is determined which is reimbursed to the entity, limited to the balance of the contribution from the previous period.

Liquidity Credits and Guarantees

The manual details three credit modalities for private financial entities, with specific limits and conditions:

• Ordinary credits: automatic credit line, with limits of 60 operations per calendar year, 10 per month, and 15 per bimester, guaranteed by free-of-guarantee contributions.
• Current credits: up to 70% of total contributions, with a maximum term of 120 days, a maximum of 3 operations per year, and a single renewal, which requires a prior payment of 30% of the principal.
• Extraordinary credits: subject to eligibility by the Superintendency of Banks, with maximum exposure limited to the lower value between 30% of the trust’s assets and 100% of the entity’s technical equity.

For extraordinary credits, entities must establish guarantees for a value not less than 140% of the amount exceeding 70% of the contributions, through a commercial guarantee trust whose minimum initial contribution is USD 50,000. The manual also regulates the operational suspension of entities in merger, exclusion, or liquidation processes, the return of contributions, loans between trusts, and the opening of accounts abroad.

Impact on the financial system

The update of the manual reinforces the Liquidity Fund’s capacity to respond opportunely and transparently to temporary liquidity shortages of entities in the private financial sector, a pillar of the stability of the Ecuadorian financial system. By specifying procedures, limits, and responsibilities of the involved actors, the regulation contributes to a safer and more predictable management of the trust’s resources, for the benefit of depositor confidence and the system as a whole.

Source: Official Registry of Ecuador, Supplement No. 364, September 8, 2026, pgs. 1-8 (official reference: Resolution No. COSEDE-COSEDE-2026-0047-R).