Oct 01/05 - On the decision to move Central Bank Reserves out of U.S. Banks: commissions as policy imperative
PMBComments: Goldman Sachs' Latin research team posted a short note on President Chávez's threat to move Central Bank reserves from
Some see this as a precursor to the also threatened break of diplomatic ties between
Government Moves Reserves out of
In another sign of the gradually deteriorating relationship with the
The immediate reason for the move was unspecified threats against the Venezuelan regime.
A high ranking central bank director did not confirm the move but cautioned that reserve management should follow eminently technical, not political, criteria, and that the bank is an autonomous institution in its reserve management.
President Chávez has also reiterated his long-held proposal to create a South American central bank that would hold the reserves of all regional banks and announced the disposition to transfer immediately US$5 billion of reserves to such an entity if created soon.
Comment: (-) It is unclear whether the transactions announced by President Chávez actually took place, or they are just representative of the somewhat confrontational rhetoric that has characterized recent public statements by the regime.
However, whether the transactions took place of not, the reality is that the autonomy of the central bank continues to be eroded, not only through statements by government officials over policies and actions that are under the jurisdiction of what on paper should be an autonomous central bank, but also by actions that force the bank to accommodate the fiscal needs and political aspirations of the government.