The Venezuelan government’s move to close four private banks plunged the price of the Bolivar and the country’s widely traded 2027 global bond as jittery investors pulled money out of the financial system to put it overseas. President Hugo Chávez tried to assure investors yesterday that his ultimate aim was to strengthen and improve the country’s financial system. "The government is putting out fire ... We are fixing the problem," he said. "We will all emerge stronger."
Chávez has nationalized key components of the economy, including oil, telecommunications and power, but he had mostly kept the banking system in private hands. However, shortly after announcing he had “no problem” nationalizing banks that broke the country’s laws and failed to lend to the poor, Chávez seized four private banks and liquidated two of them.
Although the banks hold less than six percent of the country’s deposits, more than 30 percent of these holdings have some relation to the government. The Venezuelan attorney general has barred 16 bank executives from leaving the country and their owner, Fernandez Barrueco, is now in prison facing a 10-year jail sentence.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.