TRANSACTIONS OF SALE OF FOREIGN CURRENCY WITH UNIVERSAL AND MICROFINANCIAL BANKS
Resolution No. 19-01-04, issued by the Venezuelan Central Bank (“VCB”), was published in Official Gazette No. 41.573 of January 28, 2019 (the “Resolution”). The Resolution established that the VCB may automatically make transactions of sale of foreign currency with universal and microfinancial banks governed by the Law of Institutions of the Banking Sector and by special laws, through the debit from the sole account held by the respective banking institutions with the VCB for the amount of bolivars equivalent to the exchange transaction made.
The total position in foreign currency that is sold to the banking institutions must be applied by them to the transactions of purchase-sale of foreign currency integrated to the Exchange Market System, directed through their forex trading sessions directly to their clients of the private sector, except for those that form the banking and securities market sectors, at the rate of exchange for sales provided in article 9 of Exchange Agreement No.1 of August 21, 2018 in effect on the date of said transaction and it will be paid through special deposits in foreign currency in the relevant institution. Said deposits will be nominative, non-interest bearing, and operated as per the services available at the relevant banking institution.
The VCB may authorize the performance of interbank transactions with the purpose of attending to excess end demand by the clients of the private sector of other financial institutions.
The VCB, through a circular letter, will instruct the procedure to be followed if at the end of the next-to-last bank business day of the week when the exchange intervention (Article 1) is made, the bank institutions maintain a balance not applied to transactions with the public, according to the heading of Article 2 of the Resolution. In the event that the decumulation of the positions in foreign currency is made in transactions with the VCB, they will be made at the rate of exchange for purchase in effect on the date of the exchange intervention (Article 1), reduced by 5%.
The aforesaid transactions must be reported to the VCB on a daily basis, through the mechanisms to that end provided. The banking institutions must maintain a legal reserve equal to 1% of the amount of the credit assets and investments in securities held by them according to their last balance sheet for publication, when such information is not provided with the indicated frequency. Said legal reserve must be maintained in accordance with VCB’s instructions in that connection.
The VCB will deduct the amount in Bolivars equivalent to the amount applied to the transaction to which article 1 of the Resolution refers, including those directed to interbank transactions intended for the end demand of the clients of the private sector of other financial institutions, for purposes of the legal reserve fund to be constituted as from the day when the exchange intervention is made (Article 1) and up to the last day of the following week.
In the event that the banking institutions are not able to apply the totality of the foreign currency sold and paid to them as a result of the exchange intervention (Article 2), it will be understood that the balance not applied to purchase-sale transactions will not be subject to deduction of the reserve fund for the already mentioned subsequent week. The rate charged by the VCB in its ordinary discount, rediscount and advance transactions, as in effect on each day when the legal reserve deficit occurs, will be applicable to the unsold remainder as from the date of the exchange intervention (Article 1), increased by 10 percentage points, which will be determined by the VCB at the end of each week. Balance not applied will be understood as the amount corresponding to the purchase made by the VCB according to the first part of Paragraph First of Article 2 of the Resolution.
The Resolution became effective on January 29, 2019.
In order to access the Resolution, please click here.
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