VENEZUELA

On January 14, the Venezuelan Banking Association (ABV, for its acronym in Spanish) urged the Central Bank of Venezuela (BCV, for its acronym in Spanish) to revise the policy of legal reserve for 93% of general deposits. The ABV argues that the banking system is currently experiencing a shortage of liquidity, so more funds are needed to guarantee its stability. The BCV is expected to pronounce itself on this matter in the short term.

The ABV is also asking for the approval of a system to increase legal reserve deductions, since at least Bs.S. 83 trillion (USD 46 million) are needed to stabilize the financial system, according to the entity’s estimates. It is worth remembering that in September 2020, a weekly discount of Bs.S. 30 trillion (USD 16 million) was approved.

Finally, the ABV recommended reviewing the method of calculating financial costs arising from legal reserve deficits. This calculation is made through an Investment Index, which is indexed to the exchange rate variation, making it very volatile due to Venezuela’s exchange rate instability.