The country’s banks since 2020 have allowed businesses to store US dollars in safes, providing shelter from the 3,100% inflation that is ravaging the Bolivar currency. Accounts pay no interest.
This year, banks and financial intermediaries began offering a service that converts cash into deposits in foreign bank accounts, with exchange fees ranging from 4% to 7% of the amount transferred, according to the sources.
It’s another sign of the continued advance of improvised dollarization after more than 15 years of socialist economic controls, a change driven by US sanctions that have largely cut Venezuela off from the global financial system.
The sanctions prohibit doing business with government and state-owned companies, but do not block transactions with private Venezuelan companies.
“When you have incomplete dollarization of the banking system, you have to look for ways to keep your business operational,” one of the sources said.
The service allows companies in the retail, tech and pharmacy industries to pay overseas creditors and suppliers, the sources said, who asked not to be identified.
The sources declined to identify which banks and companies carry out operations or which foreign institutions where deposits are made, noting that international banks already maintain strict restrictions on Venezuelan fund flows.
The Ministry of Information, the central bank and banking regulator Sudeban did not respond to requests for comment.
This unusual service emerged after US sanctions specifically targeted Venezuela’s central bank, and many foreign banks discontinued “correspondent banking” services that are typically required to move funds across borders.
Venezuelans are also increasingly using dollars and euros in cash for their daily transactions.
In March, 56% of transactions were made with dollar or euro banknotes, according to consulting firm Ecoanalitica, which estimates that a total of $ 2.3 billion in cash circulates in the Venezuelan economy.
In 2019, President Nicolas Maduro lifted restrictions following US sanctions against state-owned oil company Petroleos de Venezuela (PDVSA) in early 2019, cutting government cash flow. Washington calls Maduro a dictator who rigged his re-election in 2018.
Maduro, who accuses the United States of seeking to oust him in a coup, has adopted dollarization as a “escape valve” for Venezuelans suffering from the economic crisis, which he attributes to sanctions, although the recession in Venezuela began long before Washington allowed PDVSA.