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The growth of transactions in dollars
A few years ago, only real estate and vehicles were paid for with foreign currency. As of 2018, a growth of these operations began to be recorded and by April 2019 this type of operations had an increase of 40% and by July 2020 the increase was 60%, according to a study by Ecoanalítica.
In conclusion, we have a growing universe of products and services which are being paid with American currency in the commercial and financial environment of Venezuela.
We can see that the percentage of foreign exchange involved varies depending on the sector where the good or service to be paid is located. So we can see, goods and services related to technology, vehicle parts, electronics involve the use of 90% of foreign currency to cover costs, while in food, health, and personal care the percentage is located at 50%.
In relation to these figures we can induce that the circulating of dollars in Venezuela must have increased.
According to studies carried out by the firm Ecoanalítica, currently, in Venezuela, there are 2,100 million dollars in cash circulating in the financial apparatus. This amount does not include the dollars that Venezuelans have in bank accounts abroad.
Venezuelan Financial System Adopts the American Currency
Once we were able to understand the dimensions of the aforementioned situation, where foreign currency cash transactions have increased exponentially in Venezuela, it was logical that the Banked Financial System of Venezuela would take direct participation in economic activity.
A financial system that has been weakened and suffocated by erroneous government economic measures, in which strict control of access to foreign currency is established, exchange control established for two decades, interest rates established by the government. This system would find an escape valve in the creation and implementation of bank accounts in dollars.
Faced with the de facto dollarization phenomenon in the Venezuelan economy, the banking system has responded, through new technological developments, with the creation of products that allow its clients to make deposits in foreign currency, as well as payment and transfer operations.
All with the purpose of capturing part of those dollars that are circulating and incorporating them into the bank, in a lawful manner in accordance with the provisions of the Exchange Agreement No. 1 issued by the Central Bank of Venezuela in Extraordinary Official Gazette No. 6,405 dated 6 September 2018.
Risks
The political and government system in Venezuela has proven to be dictatorial in character, this raises doubts about the security and stability of this system of bank accounts in foreign currency since potential clients feel distrust of placing their money in an account which could be confiscated by the government only with the issuance of a last-minute presidential decree.
For this reason, these new financial instruments have been adopted with a "strictly transactional" character, where depositaries place only enough funds to carry out certain transactions already scheduled in the short term.
Conclusion
The financial instruments and services based on foreign currency recently implemented by private banks in Venezuela offer a new dynamism to commercial operations and at the same time increase the comfort level of customers, who will now be able to make more exact payments for the goods and services without the inconvenience of using cash due to the denominations of the available bills.
The possibility of depositing dollars and channeling them through a debit or credit card has come to optimize financial and commercial operations in a very notorious way.
Additionally, we must consider the security elements, since the possession of cash sums is avoided, which would somehow reduce thefts.
Until now, transfers have only been implemented between clients of the same financial institution, but eventually, an interbank transfer system must be incorporated.
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Hello @juanmolina, it's amazing how a government can destroy a country.
For a long time I have been watching, even under these circumstances very despite the volatility of cryptocurrencies, they are still a better way to move capital anywhere. If people knew the benefit of working with cryptocurrencies, and they avoided all that crap from the banks, they would certainly avoid these institutions at all costs. I may be radical in what I say, but that's how I see it.
You are absolutely right in what you say.
And in the case of banks, they must adopt Crypto or resign themselves to disappearing.
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Hello friend, certainly today Venezuela moves more dollars than the country's own currency, it is sad to see how our currency today is not worth anything, I remember very well that before leaving Venezuela the dollar was already gaining much importance, but the million dollar question is, will that be the solution to our problem?
Hi @juanmolina
In Venezuela, we are facing many problems, and people do not see it because of their blind feeling that they have dollars, but in the long run, it is also a problem if you realize how much in Venezuela from that de facto dollarization it also generates double inflation, and It is in our legal tender and also in the dollar. it's crazy but that's actually a big problem for any mortar like you and me who live in Venezuela.
Very interesting topic, @juanmolina.
Even though many people insist on not accepting this reality, the financial market revolves around the behavior of the dollar. It's all about it.