Olegario Barrelier said that the banks in Panama have over 58% of their deposits on hand, with easily managed exposure to the international markets that are getting beaten up in the US credit crunch. Source: Reuters

This means Panama's banks are highly liquid and are in better shape to weather this financial crisis than American and European banks which are tightly woven together in these international markets. As the US continues to have troubles those tied into the US are also experiencing troubles of their own.

Panama's banks are mostly fueled by local deposits and are not dependent on external financial markets to profit. In addition, the banks currently have double the capital that is required by law in deposits on hand which translates into a healthy, liquid banking environment.  Panama has money to lend.

Long known as an offshore banking tax haven Panama is home to almost 100 international banks making it one of Latin America's most important financial centers.  HSBC, Citi, BNP Paribas, Scotiabank and others have major offices and branches in Panama.

The uniqueness of Panama's banking system extends beyond their tight financial privacy laws. With no central bank or lender of last resort the banks of Panama are forced to stay highly liquid and take more of a conservative lending and investing approach than their counterparts in the US and Europe.

Barrelier predicts that the global crisis will eventually affect Panama but he feels it will result in a slower economy rather than permanent damage to the financial system. This can be attributed to their conservative, "stay liquid" approach that is required because they do not have a safety net to gamble with.

While most economies in the world are looking bleak right now Panama is expected to have economic growth of 9.5% this year. There are inflation concerns which the banks in Panama have been addressing since January but overall Panama appears to be well positioned to weather the global economic meltdown.

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