Before entering into the cultural analysis of the
Feriado Bancario in Ecuador, it is first necessary to explain exactly what it was, why its legacies are critical for Ecuadorian history and, importantly, what is to be gained by studying it from a cultural perspective. In this section, I present a brief overview of the main events of the crisis, especially those that were noticeable for the general public in the late 1990s. My intention is not to analyse the financial or regulatory aspects of the crisis, which have been the subject of much speculation and have been reviewed by other disciplines.
1 A report from a special commission that researched the crisis in 2007 concluded that, during the government of the former Ecuadorian president Jamil Mahuad (1998–2000), an extensive body of laws and regulations was created in order to benefit ‘determinadas instituciones y/o personas privadas’ to the detriment of the state. This book does not intend to examine neither those laws and regulations nor the people or political parties and their motivations. I do not aim to engage in blame-assignment. My goal, as stated above, is to contribute from a cultural perspective to the understanding of a phenomenon that is critically important for Ecuadorian history. See Eduardo Valencia, Ramiro Larrea and Víctor Corral, ‘Síntesis de los resultados de la investigación’, Comisión investigadora de la crisis económica financiera <https://ia802707.us.archive.org/14/items/FeriadoBancario/crisisBancaria.pdf>, July 2007 [accessed 7 September 2018]. My primary goal here is to summarise the main visible events and consequences of the
Feriado Bancario, in order to achieve a working definition that highlights some of the gaps in its understanding. Literature, I believe, adds crucial elements for the understanding of a phenomenon that, when reduced to a strictly economic sphere or studied in isolation, cannot be fully grasped. To think of the crisis through literature, this section dialogues with Beckman’s work as well as with the efforts of others who have studied the relationships between economics and fiction in Latin America. In the same way, it also builds on the ideas of the ‘New Economic Criticism’, a critical movement born in the 1990s in the North American academy that encompasses a ‘body of literary and cultural criticism founded upon economic paradigms, models and tropes’.
2 Mark Osteen and Martha Woodmansee, ‘Taking Account of the New Economic Criticism’, in The New Economic Criticism. Studies at the Intersection of Literature and Economics, ed. by Martha Woodmansee and Mark Osteen (London: Routledge, 1999), pp. 2–43 (p. 2). The theorists associated with this type of analysis focus on the intersections of literature and economics, shedding light precisely on the kind of phenomena I analyse in this chapter.
For Ecuadorians, the words Feriado Bancario possess a widely different meaning than their literal translation into English: bank holiday. While in the UK a bank holiday normally implies something workers may look forward to – being granted time off work – in Ecuador such an expression has deeper and darker connotations. These two words refer to a specific event that happened in the late 1990s, one that brought about deep transformations in Ecuadorian society. Feriado Bancario is a way of referring to an economic crisis Ecuador suffered between 1998 and 2000, which reached its peak in March 1999, when the national government declared the freezing of all bank accounts in the country as a palliative measure for a banking system on the brink of collapse. During a five-day period, all financial operations were stopped and banking institutions in the country remained closed. This episode, in which Ecuadorians could not access their savings, was named Feriado Bancario. Although the crisis started before and lasted far beyond these five days, that name has stuck in the memory of most Ecuadorians as a synecdoche of the whole experience. As such, these two words remain loaded with history and, in the Ecuadorian context as in this book, they unequivocally reference the entirety of the crisis.
The origins of the Ecuadorian crisis are hard to pinpoint. Economic literature cites many national and international antecedents which may have had some level of influence in its build-up, some of them going as far back as the 1970s. However, three of the most referenced troubling factors overlapped during the 1990s: the floods caused by the climate phenomenon
El Niño in late 1997 and early 1998, which destroyed vast agricultural areas of the country; the plummeting of oil prices in the world market, on which Ecuadorian public finances were – and still are to this day – mostly dependent; and the 1997 Asian financial crisis, which had repercussions on the international oil market and cast doubts over emerging economies all around the world.
3 Carlos Larrea, ‘Crisis, dolarización y pobreza en Ecuador’, in Retos para la integración social de los pobres en América Latina, ed. by Carlos Barba Solano (Buenos Aires: CLACSO, 2008), pp. 215–237 (p. 215). Other reports relate the roots of the crisis simply to a ‘boom and bust cycle’, that is, a process in which a period of economic boom and surplus is followed by a devastating shock and scarcity. A working paper of the International Monetary Fund highlights that, towards 1993 and 1994, the Ecuadorian economy ‘looked promising’; however, ‘financial vulnerabilities engendered during the booming period’ became evident and worsened in 1995.
4 Luis I. Jácome, ‘The Late 1990s Financial Crisis in Ecuador: Institutional Weakness, Fiscal Rigidities, and Financial Dollarisation at Work’, IMF Working Paper, 4.12 (2004), pp. 2–46 (p. 12). Those vulnerabilities spiralled into a full-blown economic crisis that is generally considered the most severe in Ecuador’s Republican history (so far).
The closure of a small bank is often referred to as the first ‘spark’ of the crisis itself. In April 1998, the bankruptcy and closure of Solbanco – a bank mainly focused on managing pension funds for the public sector – generated anxieties in depositors around the country, triggering a major deposit run in other banking institutions that prompted several of them to seek liquidity support from the Ecuadorian state.
5 Jácome, p. 17. Also known as ‘bank runs’, deposits run are common features of extreme monetary crises:
During a bank run, depositors rush to withdraw their deposits because they expect the bank to fail. In fact, the sudden withdrawal can force the bank to liquidate many of its assets at a loss and to fail. In a panic with many bank failures, there is a disruption of the monetary system and a reduction in production.
6 Douglas W. Diamond and Philip H. Dybvig, ‘Bank Runs, Deposit Insurance, and Liquidity’, Journal of Political Economy, 91.3 (1983), pp. 401–419 (p. 401).For the Ecuadorian banks, the deposit runs were aggravated by the existence of a considerable portfolio of unpaid and often uncollectable loans frequently attributed to lax financial regulations.
7 Áxel Gastambide, El camino hacia la dolarización en Ecuador (Quito: FLACSO, 2010), p. 222. Those situations – combined with the shocks of the
El Niño floods, the fall of oil prices and other external factors that limited international credits – resulted in a rapid deterioration of the national economy and the banking system. By October 1998, about 17 banks (out of 35), representing 60% of the whole system, were chronically or acutely illiquid, including two of the largest institutions in the country, Filanbanco and Banco del Progreso.
8 Augusto de la Torre, Roberto García-Saltos and Yira Mascaró, ‘Banking, Currency and Debt Meltdown: Ecuador Crisis in the Late 1990s’, The World Bank, 2001 <http://web.worldbank.org/archive/website00894A/WEB/PDF/ECUADOR_.PDF> [accessed 4 September 2018]. By February 1999, more than seven banks had already been closed, inflation had rocketed and the national currency, the Ecuadorian sucre, had lost nearly 50% of its value. The distrust in the banking system grew and, with thousands of account holders rushing to the banks to withdraw their savings every day, the government took an emergency measure and declared the temporary freeze of all bank deposits. The manoeuvre was interpreted by the general public as a confiscation of savings and wealth, making the country’s laws and institutions even less trustworthy.
9 De la Torre, García-Saltos and Mascaró, p. 22. Despite the deposit freeze – and several bailouts from the government – more banks were shut down, including Banco del Progreso in 1999 and Filanbanco in 2001, two years after being forced into government control.
The failure of the banking system had a great impact on the national economy. The sucre continued its devaluation and, by the start of 2000, the Ecuadorian president of that time, Jamil Mahuad, announced plans to dollarise the economy, that is, adopting the US dollar as the national legal tender in order to stabilise the financial system. Although the announcement was notoriously unpopular and triggered a
coup d’état against Mahuad’s government, Ecuador went on to become the first Latin American country to eliminate its national currency. The political reshuffle and the dollarisation – in the view of the economists of the International Monetary Fund (IMF) – succeeded in stabilising the Ecuadorian economy.
10 The working paper published by the IMF fails to mention that the ‘success’ of the dollarisation would have not been possible without the massive importance the remittances had in the decade following the Feriado Bancario. It was the migrants who succeeded in saving the country’s economy. See Jácome, p. 24. Nevertheless, the social costs of this so-called ‘success’ were far too great and unprecedented in the country’s history. The implementation of the dollar as the legal tender made most people poorer. The dollarisation was implemented when the exchange rate was at 25,000 sucres per 1 USD, meaning that savings of one million sucres were effectively transformed into 40 USD. According to World Bank reports, during that time, the number of people living in poverty in the country increased by almost two million.
11 Carolina Sanchez-Paramo, ‘Pobreza en Ecuador’, En Breve, 71 (2005) <https://documents1.worldbank.org/curated/en/405431468021567106/pdf/341980SPANISH0rev.pdf>, [accessed 28 February 2022] (p. 1). The inflation rate of the country reached 60%, while many businesses went bankrupt and unemployment increased up to 15% nationwide.
12 Brad Jokisch and Jason Pribilsky, ‘The Panic to Leave: Economic Crisis and the New Emigration from Ecuador’, International Migration, 40.4 (2002), pp. 75–101 (p. 76). As a result, ‘many Ecuadorians were unable to buy basic products like food and medicine, or pay their house loans and rents’, all situations that ‘increased the levels of delinquency, burglary, and violence, making people feel unsafe even in their own houses’.
13 Kathy Wong, ‘La Música Nacional: Changing Perceptions of the Ecuadorian National Identity in the Aftermath of the Rural Migration of the 1970s and the International Migration of the Late 1990s’ (unpublished PhD, University of Texas at Austin, 2007), p. 291. The impact of the meltdown was devastating for Ecuadorians, as explained by a special government commission created in 2007 to investigate the phenomenon: ‘El impacto sobre la economía de los ecuatorianos fue devastador, siendo innumerables los casos de muertes, jubilados imposibilitados de pagar sus gastos médicos, personas que debieron abandonar sus trabajos por el cierre de empresas, iniciando un descontrolado proceso migratorio, además de un sinnúmero de sucesos de igual gravedad.’
14 Valencia, Larrea and Corral, p. 39.Alongside the dollarisation, the ‘uncontrolled migration process’ mentioned in the quotation above is one of the most significant consequences of the
Feriado Bancario. The crisis triggered a mass departure that saw almost 10% of Ecuador’s population move to other countries to pursue better economic opportunities.
15 Gioconda Herrera, Ecuador: la migración internacional en cifras (Quito: FLACSO, 2008), p. 15. In only three years, from 1999 to 2001, Ecuadorian emigration exceeded one million people, most of them going to Europe, to Spain in particular. Ecuadorian departures directly to Spain rose from just over 5,000 in all of 1994 to more than 7,000 per month in 2000, making them the largest Latin American immigrant group in Spain by mid-2002.
16 Jokisch and Pribilsky, p. 82. Social sciences research argues that, in the long run, the Ecuadorian migration could be categorised as an ‘exodus’, considering that in less than a decade, a country whose total population barely exceeded 12 million people witnessed the departure of almost one-third of its economically active population.
17 Francesca Lagomarsino and Andrea Torre, El éxodo ecuatoriano a Europa. Jóvenes y familias migrantes. Entre discriminación y nuevos espacios de ciudadanía (Quito: Abya-Yala, 2007), p. 8. On a level never experienced before, migration became part of Ecuador’s history and Ecuadorians’ daily experiences, for not just those who moved abroad were affected by it, but also those who stayed. Ecuadorian society went through a series of changes, ranging from the emergence of new economic paradigms, with remittances becoming Ecuador’s second major source of income to the gross national product, exceeded only by petroleum revenues, to the reorganisation of family structures, where families were not only fragmented and spread out in more than one country, but also saw the traditional roles of their members disrupted.
18 Lagomarsino and Torre note that Ecuadorian migration to Europe was primarily feminine. That is to say, most of the Ecuadorian migrants were women, especially those who moved early after the crisis. In the receiving European countries, these women frequently found jobs as caregivers, taking care of children or the elderly. On the other hand, migrant men – often part of a second migration, travelling to reunite with their wives already abroad – encountered more difficulties finding stable jobs. This differentiation to access the labour market has helped to disrupt traditional family roles, prompting women to occupy more often roles as money-providers while men are reassigned with housekeeping duties. Needless to say, these changes have not occurred without problems. See Lagomarsino and Torre, p. 20. The
Feriado Bancario and the Ecuadorian migration of the late 1990s are deeply intertwined, for the latter happened as a consequence of the former. In that sense, as the economic anthropologist María Vera argues, the crisis was a ‘social catastrophe’: it caused a rupture in the everyday experience of those affected, who suffered the deterioration of their material conditions of existence, their sense of security, safety and welfare, and saw their expectations and future aspirations transformed.
19 María Vera, Más vale pájaro en mano: crisis bancaria, ahorro y clases medias (Quito: FLACSO, 2013), p. 9. Those affected being most of the population – despite its uneven impact, it was the whole national economy that endured the meltdown – the crisis implied a transformation at national level. Vera proposes the idea of a ‘transformation’ because the Ecuadorian crisis altered the relations of the subjects with themselves and the representations they shared about social institutions.
20 Vera, p. 15. In this light, the nation that emerged after the crisis was different to the Ecuador that had existed so far until the end of the twentieth century.
The impact of the Feriado Bancario reaches far beyond exclusively social spheres, where it has been studied primarily using social sciences approaches. The financial, regulatory, and political reasons behind the disaster constitute one common focus of analysis, while the characteristics, consequences and personal stories behind Ecuadorian migration is another commonly studied perspective. Although attention to these areas contributes to have a wider understanding of the origins and legacies of the crisis, there is still the need to expand the scope of analysis.
In order to achieve a more comprehensive grasp of the significances of the crisis for Ecuador, I propose to take a look at the literary production of the country during and after the financial collapse. That is to say, I advocate for a perspective that pays attention to the ways in which the economic reality of Ecuador intersects with and conditions its cultural production. This perspective is sorely needed because, as Fredric Jameson argues, the interrelationship of culture and economic life is ‘a continuous reciprocal interaction and feedback loop’.
21 Fredric Jameson, Postmodernism or the Cultural Logic of Late Capitalism (Durham NC: Duke University Press, 1991), p. xii. Economic phenomena such as a crisis may have deep repercussions in the literary world, but literature also finds ways to influence how economic life is experienced. In the Ecuadorian case, this is better understood if we consider the arguments of Marc Shell – one of the forerunners of the ‘New Economic Criticism’ – who proposes that paper money plays upon the everyday understanding of the relation between symbols and things, as it is almost always a representation, a symbol that claims to stand for something else or to be something else.
22 Marc Shell, ‘The Issue of Representation’, in The New Economic Criticism. Studies at the Intersection of Literature and Economics, ed. by Martha Woodmansee and Mark Osteen (London: Routledge, 1999), pp. 53–75 (p. 54, 61). Crises can disrupt such a system of representation, planting doubts in the money-stands-for-value equation. In this context, literary texts both produce and respond to reformulations of the nature of representation embodied in money and in the economic system.
23 Osteen and Woodmansee, p. 6. Thus, at the heart of this chapter lies the idea that the
Feriado Bancario disrupts national frameworks of representation and literature can help us to understand the impacts of that disruption on how the Ecuadorian nation is imagined.
Exploring the Ecuadorian economic crisis from the realm of literature is an enterprise placed in the context of existing criticism regarding economic phenomena and literary or other cultural responses in Latin America. In this field, Beckman provides an insightful analysis of how literature and economics have fed each other in the region since the Independence period. She argues that the infamous ‘boom and bust cycles’ – mentioned by IMF’s analysts as one of the explanations for the
Feriado Bancario – map onto Latin American literary production, where ‘fantasies of national prosperity’ are often followed by attempts to account for ‘frequent currency debacles, huge race and class-based disparities, and “eternal” debt to foreign lenders’.
24 Beckman, p. xxiii. This notion of boom and bust poses a striking resemblance to Gerald Martin’s theory about the ‘labyrinth’ of Latin American literature, where canonical novels of the continent share a persistent alternation between ‘utopia and apocalypse, euphoria and black despair’, that is, a labyrinthine loop in which the hope of escaping is always followed by the anguish of getting lost again.
25 Gerald Martin, ‘The Novel of a Continent: Latin America’, in The Novel Volume 1 History, Geography, and Culture, ed. by Franco Moretti (Princeton NJ: Princeton University Press, 2006), pp. 632–667 (p. 635). Both Beckman and Martin recognise that literature responds to the realities of Latin American nations but also helps to shape them, through the promotion of political and economic views as well as fantasies of capitalist consumption as argued by Beckman, or in Martin’s argument, by the articulation of a common quest for a Latin American identity.
Although Beckman’s analysis is fairly recent (2013), her period of study ranges from the late nineteenth century to the early twentieth century. Martin’s account, on the other hand, draws primarily from the Latin American Boom of the 1960s. Since the 1970s, however, the region has experienced a series of ‘neoliberal transitions’ that, in the view of Alessandro Fornazzari, have left a recognisable dent in the cultural production of the region. By interrogating political economic thought in Chile since the beginning of the Pinochet dictatorship, Fornazzari argues that the applied theories of economists from the Chicago School redefined the Chilean social sphere to understand it as part of an all-encompassing economic reality: ‘the economy is no longer considered one social domain among others, but an area that embraces the entirety of human action’.
26 Alessandro Fornazzari, Speculative Fictions: Chilean Culture, Economics, and the Neoliberal Transition (Pittsburgh PN: The University of Pittsburgh Press, 2013), p. 49. To explain his point, Fornazzari turns to José Donoso, whose novel
Casa de campo (1978) – in the critic’s view – signals a transition to a society run by neoliberal ideals:
The forms of abstraction that begin to emerge in
Casa de campo are of a different order than those associated with earlier realist narratives or modernist boom aesthetics. They are forms of abstraction marked by the emergence of economic ideas that begin to usurp the roles of characters, figures, and themes. This is in part what defines Donoso’s novel as a transitional text: there is a tendency toward the abstract concepts of political economy (primitive accumulation, commodification, exchange value, gold and the turn to fiduciary currencies, and finance crisis).
27 Fornazzari, p. 24.Fornazzari proposes that, by featuring economic notions, Donoso’s novel announces that the economic dimension is merging with the social dimension in the Chilean society of the late 1970s. In response to this phenomenon, literature and other cultural forms engage in a struggle to create a language to name the emergent formation. In doing so, these cultural products also call into question the problems and logics of neoliberal capitalism.
This book draws from Beckman’s and Fornazzari’s approaches in order to dialogue with and expand the existing criticism regarding economic life and cultural production in Latin America. Ecuador’s recent history, I believe, provides a unique case study to expand our grasp of how economic phenomena can alter a nation’s reality and its self-understanding as a national community. Ecuadorian literature calls our attention to the importance of a single catastrophic event, and functions as a medium to understand it as a defining cultural shift. My argument in the following section is that novels like El oscuro final del Porvenir engage with its historical present, alerting readers that – after a crisis with the dimensions of the Feriado Bancario – a country cannot continue business as usual, for the emergent nation that follows needs different frameworks to be described and understood. National limits – or the discovery of their porosity – are pinpointed as key elements to comprehend that the economic crisis reveals the national as transnational.