Central Bank of Venezuela

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%).

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.

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".

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.{{cite web |url= http://www.bcv.org.ve/c3/lawbcv2015.pdf |title= DECREE WITH THE RANK, VALUE AND FORCE OF LAW OF THE CENTRAL BANK OF VENEZUELA |access-date = 27 January 2018 |last= Maduro-Moros |first= Nicolas |date= 30 December 2015 |website= Central Bank of Venezuela |language = English |archive-url= https://web.archive.org/web/20180127235042/http://www.bcv.org.ve/c3/lawbcv2015.pdf |archive-date= 27 January 2018

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.

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.

Presidents of the Central Bank of Venezuela

References

References

1. (2017). "The Organisation and Structure of Central Banks".
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3. (27 January 2018). "Company Overview of Banco Central de Venezuela BCV".
4. Reyes-Torres, Eddy. (22 August 1996). "Automated Clearing House".
5. Pons, Corina. (5 February 2016). "Exclusive: Venezuela central bank in talks with Deutsche Bank on gold swap". [[Reuters]].
6. (17 July 2013). "UPDATE 1-Venezuelan central bank sells $215 mln at currency auction". Reuters.
7. (17 April 2019). "Treasury Sanctions Central Bank of Venezuela and Director of the Central Bank of Venezuela". U.S. Department of the Treasury.
8. (5 January 2016). "Venezuela central bank curbs fuel fears over hyperinflation".
9. Serpa, Ana-Carolina. (7 January 2016). "New Law of the Venezuelan Central Bank".
10. Cancel, Daniel. (23 August 2012). "Venezuela Sells Record $44 Million PDVSA 2035 Bonds in Sitme". Bloomberg.
11. (22 January 2014). "Oficializan designación de Nelson Merentes como presidente del Banco Central de Venezuela". [[El Nacional (Caracas)]].
12. (23 January 2017). "Venezuela President Maduro names new central bank chief". [[Deutsche Welle]].
13. Laya, Patricia. (26 October 2017). "Maduro Taps Finance Minister as Venezuela Central Bank Head".
14. "Galería de Expresidentes | Banco Central de Venezuela".