The Central Bank of Venezuela (, BCV) is the

central bank A central bank, reserve bank, national bank, or monetary authority is an institution that manages the monetary policy of a country or monetary union. In contrast to a commercial bank, a central bank possesses a monopoly on increasing the mo ...

Venezuela Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many Federal Dependencies of Venezuela, islands and islets in the Caribbean Sea. It com ...

. It is responsible for issuing and maintaining the value of the

Venezuelan bolívar The bolívar is the official currency of Venezuela. Named after the hero of South American independence Simón Bolívar, it was introduced by President Antonio Guzmán Blanco, Guzman Blanco via the monetary reform of 1879, before which the Vene ...

and is the governing agent of the Venezuelan Clearing House System (including an automated clearing house).

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 Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...

(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 Gross domestic product (GDP) is a monetary measure of the total market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic performanc ...

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. The

Constitution A constitution is the aggregate of fundamental principles or established precedents that constitute the legal basis of a polity, organization or other type of entity, and commonly determines how that entity is to be governed. When these pri ...

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. 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

{{DEFAULTSORT:Central Bank of Venezuela Banks established in 1939 Banks of Venezuela Government of Venezuela

Venezuelan companies established in 1939