Spanish— In Venezuela, signs of the digital dollarization proposed by Nicolás Maduro are beginning to be visible. The regime had already decided to include the national banking system in the face of the inevitable dollarization of the economy. A measure that does not promise any real solution.
“This year, we are going to move towards a 100% digital economy. Under the supervision of Sudeban, we are already authorizing the opening of accounts at all levels in dollars,” said Maduro during his misleading annual report.
In this regard, it was reported that a group of four private Venezuelan banks started issuing debit cards to clients with dollar accounts. The measure is quietly backed by authorities who want to extend the use of dollars in routine transactions, according to a Reuters investigation.
According to the news agency, state officials gave the green light to private banks to allow their clients with dollar accounts to use their money to make transactions in bolivars.
Maduro’s strategy looks soft. The objective of “regularizing, strengthening, and dynamizing the bolivar” falls apart when external factors are taken into account. For example, if the payment of fuel is finally decided in the local currency, this could have repercussions on the exchange rate and inflation.
In a recent interview with PanAm Post, the director of Econométrica, Henkel García, explained the scenario. To lower hyperinflation, it is a “matter of expectations of not falling into the temptations of using the Central Bank as a payment system.”
“Hyperinflation brings many demons. Here we may be trying to tame some of them, but others are still at large,” he said.
Not so reliable
The government banks have announced advances in public. In fact, the state-owned Banco del Tesoro has already launched a campaign on a new debit card in dollars.
“Pay exact and without complications!” reads its Twitter account. The image shows some of the alleged benefits that the user of that card will have.
¡Paga exacto y sin complicaciones!💳
Con la Tarjeta de Débito Plus podrás realizar pagos asociado a la Cuenta Moneda Extranjera Plus, cuyo saldo consolidado servirá de respaldo a las transacciones de pagos por puntos de venta. pic.twitter.com/AxEeDDTMVe
— Banco del Tesoro (@bcodeltesoro) January 27, 2021
“The bolivar will gradually become a currency for transactions, while savings will be in dollars,” a finance executive told Reuters.
This may not be the case. Time will tell if the population trusts a system administered by the dictatorship to the point of leaving their savings in dollars there if they have any. It is already clear that Venezuelans are barely surviving in a distorted economy, and salaries are not enough.
“Without instances to protect deposits, there is the fear that they will take the dollars and convert them into local currency at an arbitrary rate,” warned Henkel García in the recent interview.
It would work like this: when customers make purchases with the cards, the associated dollars will be offered to the Venezuelan Central Bank, which in turn will auction the green bills as part of its foreign exchange platform, which generally does not have dollars, the sources told the news agency.
Back to the bolivar?
The nefarious cocktail of the Venezuelan economy has led the population to cling to the dollar. It is not uncommon to see Venezuelans with a few dollars in their pockets. The simplest transactions are made in foreign currency, and the regime had no choice but to accept it, even though it publicly rejected the American currency.
In the digital area, the scenario is even clearer: transactions in dollars reached 60% by the end of 2020. The supposed dynamism that Maduro intends to give to the bolivar would be unfeasible with such an advanced dollar process. Returning to the national currency may not be an option for the ordinary citizen who must defend his little purchasing power.
Many of those residing in Venezuela have access to dollars through relatives abroad or through companies in the country that pay their employees in foreign currency. In the meantime, around 2 billion dollars in cash circulate in the economy, according to the local firm Ecoanalítica.
The challenge is great for the dictatorship, which, despite its socialism, cannot deny that it needs to open up to a stronger currency, although the measure may have come a little late for the fractured economy.