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Central Bank of Venezuela

The Central Bank of Venezuela (, BCV) is the central bank of Venezuela. It is responsible for issuing and maintaining the value of the Venezuelan bolívar and is the governing agent of the Venezuelan Clearing House System (including an automated clearing house).[4]

History

Foundation and currency management

Since its inception in the late 1930s, the BCV was given a clear mandate to control the monetary policy of the nation, centralizing the operations of a handful of private banks that used to mint the Venezuelan currency, the bolívar. For almost 50 years the BCV managed to sustain a remarkable strong currency, with inflation rates hovering on the 2-3% mark during that period.

1980s oil glut

However, since the oil glut of the 1980s and the first serious devaluation of the currency in 1983 (known in Venezuela as Viernes Negro, or Black Friday) the bolívar has been plagued with chronic instability, mistrust and declining value that has been fed by the continued rise in inflation, topping an estimate for 2018 of one million per cent. Most of the foreign reserves are held as gold bars in Germany (almost 64%).[5]

Until 2015 the Supplementary System for the Administration of Foreign Currency (SICAD) operated as an alternative foreign exchange system for businesses and individuals. Given its ineffectiveness and the continued rise of the parallel (black market) exchange rate the system was discontinued in favor of the "Complementary Currency System", known for its Spanish acronym DICOM.[6]

2017: Hyperinflation

Since December 2017 Venezuela the CPI has presented a behavior that fits most of the definitions for hyperinflation, the first in the country's history. The bank, subject to a strong control by the executive branch of the Venezuelan government, has ceased the publication of metrics such as the CPI and gross domestic product variation, creating a vacuum that has left investors and the public in a general state of disarray.

2019: Sanctions

In April 2019, the U.S. Treasury Department sanctioned the Central Bank of Venezuela "to prevent it from being used as a tool of the illegitimate Maduro regime".[7]

Mandate

By law, the Central Bank of Venezuela is autonomous to formulate and exercise policies in its field of competence and it performs its duties and functions in coordination with the general economic policy.[8] The Constitution grants the central bank autonomy to outline and implement the policies. However, as of 2016, reforms deemed unconstitutional by some effectively nullified the BCV's independent status.[9]

The export, import or trade of Venezuelan or foreign currency are subject to the regulations established by the BCV, including the departure or arrival of coin and notes made by another countries by BCV's express order.[10]

System for Transactions with Foreign Currency Securities

The Central Bank is able to issue bonds through the System for Transactions with Foreign Currency Securities (SITME). In 2012, it was reported that $44 million worth of bonds were purchased through SITME in a single day for Petróleos de Venezuela, S.A.[11]

Presidents of the Central Bank of Venezuela

See also

References

  1. Jan Weidner. The Organisation and Structure of Central Banks Katalog der Deutschen Nationalbibliothek, 2017^
  2. Google Maps Google Maps, retrieved 12 October 2017^
  3. Company Overview of Banco Central de Venezuela BCV Bloomberg News, 27 January 2018, retrieved 27 January 2018^
  4. Eddy Reyes-Torres. Automated Clearing House Central Bank of Venezuela, 22 August 1996, retrieved 27 January 2018^
  5. Corina Pons. Exclusive: Venezuela central bank in talks with Deutsche Bank on gold swap Reuters, 5 February 2016, retrieved 27 January 2018^
  6. UPDATE 1-Venezuelan central bank sells $215 mln at currency auction Reuters, 17 July 2013^
  7. Treasury Sanctions Central Bank of Venezuela and Director of the Central Bank of Venezuela U.S. Department of the Treasury, 17 April 2019, retrieved 2 December 2019^
  8. Nicolas Maduro-Moros. DECREE WITH THE RANK, VALUE AND FORCE OF LAW OF THE CENTRAL BANK OF VENEZUELA Central Bank of Venezuela, 30 December 2015, retrieved 27 January 2018^
  9. Venezuela central bank curbs fuel fears over hyperinflation Financial Times, 5 January 2016, retrieved 2019-01-04^
  10. Ana-Carolina Serpa. New Law of the Venezuelan Central Bank Norton Rose Fulbright, Global law firm, 7 January 2016, retrieved 27 January 2018^
  11. Daniel Cancel. Venezuela Sells Record $44 Million PDVSA 2035 Bonds in Sitme Bloomberg, 23 August 2012^
  12. Oficializan designación de Nelson Merentes como presidente del Banco Central de Venezuela El Nacional (Caracas), 22 January 2014, retrieved 11 February 2015^
  13. Venezuela President Maduro names new central bank chief Deutsche Welle, 23 January 2017, retrieved 27 January 2018^
  14. Patricia Laya. Maduro Taps Finance Minister as Venezuela Central Bank Head Bloomberg News, 26 October 2017, retrieved 27 January 2018^
  15. Galería de Expresidentes | Banco Central de Venezuela BCV^