Decrease in legal reserve may have inflationary impacts
The economist Leonardo Buniak considers that the reduction of the legal reserve announced by the vice president of Venezuela, Delcy Rodríguez, could trigger an inflationary impact if there is no balance in the supply of goods and services
Given the recent announcement by the Vice President of Venezuela, Delcy Rodríguez regarding the reduction of the legal allowance, the economist and specialist Leonardo Buniak has pointed out that without coordination in the supply of goods and services the measure can have an impact on inflation.
According to Buniak, “if there is an expansion of bank credit that is not accompanied by an increase in the production of goods and services to satisfy the demand that is going to occur, the consequence will be inflation.”
The specialist estimates that the impact of the reduction in the legal reserve will be immediate in the banking sector, given that “the resources that are frozen in the Central Bank of Venezuela, in the proportion that the reserve is reduced, would be available for the banks can finance the withdrawal demand of depositors and finance bank credit.”
He highlighted that bank credit is key in leveraging the growth of the Venezuelan economy; “It is a trigger for private consumption spending... A decrease in the legal reserve would open the doors to the banking sector to boost credit and be able to finance various formats.”
In Buniak’s opinion, the implementation of the reduction of the legal reserve must be coordinated with Fedecámaras to monitor the impact on companies so that they can put goods and services on the street.
M.Pino
Source: elaragueno
(Reference image source: Alexander Grey in Unsplash)
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