This law recognizes, promotes and strengthens the Popular, Solidary Economy (PSE) of Ecuador, as well as its relationship with other sectors of the state. The "Popular, Solidary Economy" is defined as “a form of economic organization in which members collaborate to produce, exchange and consume goods and services which allow them to satisfy their needs and produce profits”. The law outlines the regulations to be followed by the PSE institutions serving low income populations. It regulates their capital requirements, internal structures, anti-money laundering (AML) practices, audit policies, deposit insurance levels and interest rates.
The Law classifies types of organizations in three different parts: the communal sector, the associative sector and the cooperative sector.
The Communal Sector are groups of organizations which are tied by land, family, ethnic identity, gender, or culture factors. They co-jointly produce and commercialize goods and services. The Associative Sector is comprised by groups of associations with similar productive activities; they strive to consume, produce and commercialize goods and services. The Cooperative Sector is the group of institutions which voluntarily join to satisfy their economic, and social needs. This law regulates the basic requirements of these institutions, including their capital stock, revenues, equity and liquidity levels.
The Liquidity Fund and Deposit Insurance stores liquidity reserves and manages any deficiencies in the cooperatives' compensation funds. The Fund will be financed by all organizations within the PSE.