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| Additional information |
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| Banco Central de Venezuela |
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Mission statement:
The Banco Central de Venezuela is a legal body subject to public law. It independently devises and exercises all policies which fall into its remit, and carries out its functions according to general economic policy in order to achieve the overarching objectives of the State of the Nation.
Its fundamental objective is to achieve price stability and preserve the internal and external value of the currency as part of the public policies designed to facilitate well-ordered national economic development.
To achieve this, it formulates and carries out Monetary Policy, participates in designing and carrying out Exchange Rate Policy, regulates currency, credit and interest rates, and administers international reserves – all as part of the economic and social development plans and policies of the State. |
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Vision:
The Banco Central de Venezuela is an organization of high prestige and with great credibility on the national and international scene. Central to its mission, and as part of its functions, it has full autonomy and responsibility for the overall coordination of the policies which fall into its remit. Its acts consistently and firmly, which has earned it the respect of its peers and the community. It is backed up by an integral and flexible organizational system which lays priority on making the most of opportunity, finding good solutions and fulfilling policies. This is boosted by a culture of excellence and teamwork among a highly qualified staff motivated by achievement and success. |
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History:
The creation of the Banco Central de Venezuela took place against a backdrop of great political, social and economic changes in the world. Aside from the start of the Second World War, the country itself was starting a great debate about the political and economic direction which Venezuela should take following the 27-year rule of General Juan Vicente Gómez. The new government worked out a national plan called the February Program, which foresaw a series of economic policy measures, one of the most important of which was the foundation of the Central Bank.
The Banco Central de Venezuela was created by virtue of a law promulgated on September 8, 1939, and published in the Official Gazette No. 19,974 on December 8, 1939 during the presidency of Eleazar López Contreras.
Conservative sectors in the country made this into an extremely heated issue, as they did not fully understand the changes going on at either an international or national level. They saw it as a threat to the monetary stability of the nation, seeing in a Central Bank the danger of runaway and uncontrollable public expenditure. This situation led to claims of the project’s unconstitutionality (which failed) after the law was promulgated by the National Congress. The row was taken up by the media, and one commercial bank also fought against the new legislation, which established the BCV’s central and exclusive right to produce bank notes and required private banks to hand over the gold needed to back the bills in circulation.
The production and circulation of notes throughout the whole national territory became the exclusive right of the Central Bank. The BCV alone could put notes and coins into circulation through the purchase of gold, foreign currency and the carrying out of credit operations with banks and the public, as specified in the legislation. Central Bank notes were convertible into Venezuelan legal tender in gold bars or on-sight transfer bills on funds deposited abroad. The Bank was obliged to back up 50% of the notes produced in national or foreign gold currency and in bars deposited in its own vaults or in those of foreign banks abroad, as well as in on-sight deposits in foreign banks.
The BCV Law has been reformed throughout the Bank’s history in 1943, 1948 (a failed attempt), 1960, 1974, 1983, 1984,1987, 1992 and finally in 2001, which is the legislation which remains in force. All the reforms were made to meet internal demands from rapid changes going on in the nation, as well as the Central Bank’s new policy directions in more developed economies, deriving from the growth of a new international financial order.
The first significant change in legislation relating to the BCV came about in the midst of the severe economic crisis of the sixties, when the General Banks Law brought in changes needed to meet the new international and national circumstances being experienced not just by the country but by the whole of the western world. This meant not just modifying one law in isolation, but modernizing the whole of the country’s financial legislation as part of the process of political-institutional change and transformation which would lead to the current era of democracy.
The other major reform in the Bank’s legislation came about on December 4, 1992, when the BCV was given administrative autonomy, turning it into a public legal entity. Until then, the Bank had been corporate in nature, a situation reflected in the make-up of its directorship. Now, this was replaced by a collegiate body of seven members, a president and six directors, who were chosen by the President of the Republic. These officials serve for terms of six years – two years longer than a political term, thus avoiding a constant chain of political appointments. The president’s appointees must be approved by a two-thirds majority in the Senate, while the Executive’s representative in the Bank’s directorship is limited to just one director, who can never be the Treasury Minister. Another new aspect introduced by this reform was the express prohibition of granting direct credit to the National Government, as well as the establishment of a regulation obliging the Republic to replenish the Bank’s assets whenever it incurs losses due to the Republic’s policies.
The Central Bank’s current framework has been adjusted to meet the challenges and currents of a globalized world, where institutions such as the BCV use and value their independence as a means of reacting to the great changes occurring in the financial, banking and monetary spheres. In other words, the BCV has a very well-defined task with relation to three variables: money, credit and the exchange rate. The aim is to contribute to three overarching objectives: monetary stability, economic balance and well-ordered economic development.
The changes in the mission and philosophy of the Central Bank have been mirrored by changes in the buildings and spaces it occupies, brought about by the complexity of its functions and the growth in its influence in the country and society as a whole. As well as becoming a member of the international financial community, it has to operate alongside institutions or centers of economic power in spaces well fitted to the function it fulfils. In other words, the Bank’s image both inside and outside the country must be seen to have a suitably fitting image for its important public role. |
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