Colombian regulators made banks safer, but long-term lending kept growing

Colombia's financial regulators made banks set aside more money for long-term consumer loans. This made banks safer, but it did not slow down how much money they lent out or change the terms of those loans.

Governments often make banks set aside more cash to slow down lending and make the financial system safer. In Colombia, this rule made banks safer, but it did not stop them from lending out just as much money for long-term consumer loans. This means one common tool for controlling credit growth may not work as intended for certain types of loans, forcing regulators to find other ways to cool down an overheating economy.