Venezuela approaches dollarization

Venezuela expands the use of foreign currency bank accounts, the last step towards dollarization of the economy, so struck by the crisis.

“The opening of accounts at all levels in convertible currencies, in dollars is authorized,” said President Nicolás Maduro during his annual address to the nation.

Statement: Venezuela is concerned about the stability of the United States

While the Venezuela’s economy contracted for seventh consecutive year in 2020, government turned a blind eye to growing number of dollar transactions and relaxed controls that restricted private business. Over $ 2 billion in remittances have been received, and many products are now available to those with access to foreign exchange.

The Local banks may already offer US dollar accounts, but transactions are limited due to the lack of a clearing system that allows electronic funds transfers between different banks.. Maduro’s proposal would allow the widespread use of debit cards connected to these accounts.

The Venezuelans will now be able to pay in Bolivars with debit cards from their dollar accounts, Maduro said.

The Dollarization of the economy is a necessary and beneficial escape valve for economic life, says president.

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Because a inflation over the last 12 months of 1.858%, bolivar banknotes are losing value in record time, increasing the need for digital payments and currencies to facilitate transactions.

Maduro said that in the past six years, Venezuela has lost 99% of its foreign currency income; and set the oil production target for 2021 at 1.5 million barrels per day, or 500,000 barrels per day below the country’s 2020 target.