Bolivia to Impose Further Restrictions on the Dollar

As part of its efforts to "de-dollarize" the economy, the Bolivian government has announced that by 2016 all banks and credit unions in Bolivia offering accounts in dollars will be required to hold 66.5% of total deposits they receive in dollars, in reserve at the Central Bank of Bolivia. This will leave just 33.5% available for lending. Currently banks are required to reserve 30% of all dollar deposits, leaving 70% available for lending. Application of this measure will begin in April of 2013, increasing gradually through 2016, and applies only to bank accounts in dollars.

Banking entities Asofin (Association of Financial Entities Specializing in MicroFinance) and Asoban (Association of Banks) were quick to note that this measure is a disincentive to transactions in dollars and warned that it would make it even more difficult for the country to attract foreign investment. Deposits in Bolivia's official currency, the boliviano, had already increased to 72% in 2012, leaving only 28% in dollars.

Nelson Hinojosa, president of the Asofin, stated that the purpose of this measure is to make it impossible for Bolivian banks to offer accounts in dollars, eliminating them completely by 2016. Asoban president, Kurt Koenigsfest, stated that the measure will not only deter deposits in dollars, but also credits. Marcelo Zabala, head of the Banco Central de Bolivia, countered that all countries neighboring Bolivia are also taking steps to protect their currencies and avoid inflation.


Date: 29 January 2013 Source: Eju.tv

http://eju.tv/2013/01/banco-central-de-bolivia-pone-ms-restricciones-al-dlar/

Comments for Bolivia to Impose Further Restrictions on the Dollar

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Jul 11, 2013
Unable to access money from banks outside Bolivia
by: Teresa

I don't know if others have had this problem but the few automatic tellers that give $ in Cochabamba are no longer giving any money to people with debit cards from banks outside of Bolivia. My children live here and I have lived here 8,5 years and am moving to NZ soon and can no longer get money from NZ to Bolivia even by an international transfer. No automatic teller will give me $ or bolivianos and I have yet to try Western Union to see if that is still possible. The banks are blocking. I need to find some way to send money to my kids as they are students. Any ideas??

Feb 01, 2013
China is Our Biggest Lender
by: Anonymous

But they are only at 13% of money borrowed. Japan is second with 12%. China's GDP is still considerably less than our's and with the stagnate world economy they are struggling. One more thing about all the money we've borrowed, the lenders want their investment and returns safe so it's in their best interest to keep the U.S. economy strong. They aren't going to burn themselves burning us. Not a good idea to borrow so much, but they are in deep with us having lent it. And considering how "well" the European Union is doing, don't be too sure that others will be eager to form similar unions.

Feb 01, 2013
Don't overestimate US dollar power
by: Anonymous

The Bolivian government doesn't seem to care much whether this will deter foreign investment in Bolivia or not, or whether it will harm Bolivian exporters who are attempting to get foreign companies to purchase their goods.

Yes, it does mean the Bolivian government is trying to weaken the dollar and strengthen the boliviano. That's why the Bolivian government is talking about "bolivianizing" the economy again and doing everything it can to discourage people and companies from using dollars and/or saving in dollar accounts.

For some reason the Bolivian government seems to think this will strengthen the boliviano. And artificially, it will. But what they don't seem to understand is that it will cause foreign investors to lose trust in Bolivia's economy.

On the other hand, Bolivia doesn't seem to want dollar investments or US investments. It has allied with countries like Iran and China and is doing all it can to attract investors from those countries instead. In addition, many of the South American countries are thinking in like manner and there has been a lot of talk about forming a South American trade block, which essentially would mean Bolivia wouldn't rely so much on US investment or purchase orders any more. They are trying to get away from needing to export to the US so much and are looking for ways to export to other countries instead.

What many Americans haven't realized is that MANY countries are doing this. MANY countries no longer want their economies to depend on the dollar. The US has one of the highest foreign debts in the world and Obama is going to increase our foreign debt. And with the entire world watching as out Congress fights about petty politics rather than truly solving the American economic crisis, many countries are looking for solutions such as this. Eventually, if they are successful, the US could see itself excluded more and more from the world economy. The US is already very close to losing its top credit rating and this will make it very difficult for the US to get more loans overseas, investment credits, and other credits. And many countries are steering away from basing the value of their currency on the dollar. Top economists have been warning about this for years but the US government has turned a blind eye. One economist warned that by 2015 nearly 30% of the world's economies will no longer be based on the dollar as more and more countries phase the dollar out of their economies. The US could suffer greatly from this. Much of the world no longer wants the dollar to be the world's reserve currency. They are now "reserving" in other currencies, gold, etc.

The steps the Bolivian government is taking are clear signs of this. And Bolivia is not the only country doing this. Also, keep in mind that half of the US is owned by foreigners now. China owns most of Manhattan, for example. Within 6 years the US will no longer be the world's economic super power. China will be the top economic power very soon.

Jan 31, 2013
The Dollar is Still...
by: Wade K.

...the world's reserve currency. Are you saying if they implement this the B will actually strengthen against the Dollar? 6 to 1, 5 to 1? Why? Bolivia is still one of the poorest countries in the Western Hemisphere. I know Obama's policies haven't done much to strengthen the Dollar but will the world currency markets view the Boliviano in a more favorable light doing this?

Jan 31, 2013
Dollar is declining, not increasing in value
by: Anonymous

Actually, the Bolivian changes are designed specifically to DECREASE the value of the dollar against the boliviano. If the value of the dollar were not being ARTIFICIALLY held at 6.94Bs. right now, it's real value at this time would probably be higher. Most likely, at REAL rates, the dollar would be worth over 8 bolivianos right now.

Jan 31, 2013
Yes, That's It
by: Wade K.

Another point is that while your account in the States is in Dollars, when you withdraw money at an ATM in Bolivia you don't have to receive the money in Dollars. You can receive the equivalent in Bolivianos, minus the ATM fee, and ATM's give the best exchange rate. So if Bolivia does away with Dollar accounts in Bolivia it won't really affect you, and if the B declines in value against the Dollar then your cost of living will go down.

Jan 31, 2013
Live in Bolivia, Bank in the US
by: Anonymous

I think what Wade is saying is that you can do as many others of us do: if you have an account in the U.S. you can bring the ATM card for that account to Bolivia. When you need dollars just use that ATM card in any ATM in Bolivia to withdraw the money you have in savings in the United States.

I do this and I've found it's better because I can keep my money in the US and still have access to it whenever I like. You just have to be sure you know how much your bank charges you on international ATM withdrawals. For example, when I use my ATM card in the US, my bank doesn't charge me anything. But when I use it in Bolivia to withdraw funds from my US account I'm charged a $3.00 fee.

The point is that you don't need an account in US dollars in Bolivia. Simply bring your US bank account ATM card with you to Bolivia.

Jan 31, 2013
To Wade K.
by: Boliviabellafan

Hi Wade!
My issue is that I have a small amount of (life) savings in $ in the US. From time to time, I need to withdraw some and have it sent to my bank here in Bolivia and promptly convert it to Bolivianos for my immediate personal use here.

But I guess the restrictions won't affect me. ????

Jan 30, 2013
What I'm Saying is...
by: Wade K.

....that as an American you can keep your funds in the States and access them through an ATM. So this new policy wouldn't affect you at all. Why the need to have a Bolivian account? I've noticed reading a number of websites that the Bolivian gov't has nationalized quite a few industries, putting them under gov't control. Eventually that's going to get them in trouble, and wrong headed policies like eliminating the Dollar will most likely accelerate the decline. If you are familiar with the Ecuadorian Sucre before they adopted the Dollar you know how weak a currency can become, and how cheap a country is with a super weak currency. I guess if he despises the U.S. that much then there's little hope for making it easier to move there for Americans. If he destroys the economy however don't be surprised to see another Bolivian tradition, a military coup.

Jan 30, 2013
not a good idea for bolivia
by: Anonymous

Wade K: The law will apply to bank accounts in dollars in Bolivian banks, not accounts in the US. The law will not only affect Americans living in Bolivia, but ANYONE who has an account in dollars in a Bolivian bank. But that's the point - to discourage and eventually make it impossible to open a dollar bank account in Bolivia. This really sucks. I'm certainly not going to save my money in bolivianos or even in Bolivia any more.

I think the result of this will be that people will do everything possible to ship their money out of Bolivia by opening savings accounts overseas and avoiding Bolivian banks altogether.

Foreigners will not open accounts in Bolivia, investors will avoid Bolivia, Bolivian companies will lose business with overseas partners ... in the long run this will hurt the Bolivian economy.

Jan 30, 2013
Dear Wade K., (and everyone)
by: Boliviabellafan

Thank you for your insights.
As an American and a legal permanent resident of Bolivia for almost 6 yrs. already, with some savings in my US bank (dollars), I am concerned about the exchange rate, and how this new policy will affect my ability to access and use my savings here in Bolivia.
Another issue is the fact that the cuurent president despises capitalism and wants nothing to do with it, nor those who adhere to its principles. He wants to erradicate it from Bolivia.

Jan 29, 2013
Why Not Bolivia?
by: Wade K.

How would this affect your living in Bolivia? You'd draw money off your account in the States at an ATM. Certainly Panama and Costa Rica have their advantages, but low cost isn't one of them. If anything this restricting Dollar accounts might weaken the Boliviano, which appears to be kept artificially at close to 7 to the Dollar. If eventually it slips to 10 or more Bolivia will be worth the travel and red tape for many more than the relative few that make it there now. If they would stop punishing American citizens for our government's policies and make it possible to move there with minimal red tape it would be worth it to me. It's a long, expensive flight home on a small pension to see family, but one I'd be willing to do if I didn't have to jump through a lot of hoops to live there. I can live just as cheaply in very safe Nicaragua with easy requirements and reasonable flight prices on Spirit Airlines. I can live on tourist cards in Mexico and take a bus to the border and fly home on Southwest. If this website has any pull with the government tell them they are missing out on improving their economy some by making it so difficult, especially for Americans.

Jan 29, 2013
Thank you for that VALUABLE info.
by: Anonymous

WOW... I guess Bolivia is out of the question for American's to retire there :( Well I guess it's Panama or Costa Rica for me

Jan 29, 2013
B's Will Lose Value?
by: Wade K.

If they go through with this will it possibly cause the Boliviano to lose value against the Dollar? If so might make Bolivia even more attractive as a retirement destination.

Jan 29, 2013
What Non$en$e!
by: Boliviabellafan

Thank you for this timely report, dear Boliviabella!


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