What Are Venezuelan Bankers Trying to Hide?
Español“Every misfortune is fruitful if one is able to weather it with magnanimity, without giving up one’s values.” — Ernesto Sábato.
Venezuela’s Banking Association recently issued a brief statement making the following claims:
“Websites, social networks, or any other means that divulge an exchange rate different from that of the Central Bank of Venezuela or any other official entity are not a valid reference and are a misrepresentation.… We suggest avoiding that value to establish the exchange rate of the bolívar in relation to the US dollar or any other currency.…”
“The practice of fixing an exchange rate based on supposed parallel markets with petty cash operations that are not representative of the Venezuelan economy as a whole, and carried out in a non-transparent market, leads to a lot of speculation that generates profit for the few and losses for the majority.”
“Every day, non-official sources report volatile exchange rates, without any underlying rationality.… Venezuela’s Banking Association warns that this situation leads to an inflationary spiral generating shortages and poverty.”
First of all, even though the Banking Association’s statement omits it, Venezuelans have suffered through currency controls for more than 10 years. The distortions are not generated by websites, social media or any other internet source. Incidentally, these outlets are practically the only independent media left in Venezuela after the government’s harassment of newspapers.
Second, even if we don’t use these indicators, the various official exchange rates do not match economic reality. They reflect an artificial value of the US dollar.
Third, it is the currency controls themselves that are not transparent, and not these websites. A transparent market would involve free exchange between sellers and buyers. It is the Central Bank’s monopoly on buying and selling foreign currency that lacks transparency; the same entity which has not released inflation or shortage statistics for several months.
Fourth, these websites have found a certain rationale to explain their rates by comparing the US dollar with the Colombian peso at the border. It is not ideal, but more reliable data is not available due to currency controls, an astonishing and unprecedented omission by the bankers.
Fifth, websites and social media can’t be blamed for widespread shortages and poverty which are a consequence of misguided government policies. I suggest Venezuela’s Banking Association have a look at the research conducted by CEDICE’s Property Rights Observatory, Economic and Legislative Observatory, and Observatory of Public Spending, among other institutions.
While I am a member of CEDICE’s Academic Committee, this is not meant as an argument from authority. The Banking Association’s statement, by any standard, reveals deep ignorance about the Venezuelan economy.
Last but not least, please do not try and rationalize the statement by arguing it was issued under government coercion, or that we should try and understanding the targeting of banks, the country’s situation, or any other excuse.
Venezuela is in crisis and it will likely get worse. However, we cannot and must not pave the way for the government to suppress our few remaining freedoms. Are we going to fall into the same trap as those Nazis who invoked “higher orders,” as described by Ingo Müller in Hitler’s Justice?
We must not give in to the pressures that we all face one way or another. Otherwise, we subject ourselves to the worst of all slaveries: voluntary servitude.