Central Bank regulates interest rates

April 28, 2005

In last night’s post I talked about “experimental economics” in
Venezuela and today the Venezuelan Central Bank launched a new (but
old) experiment by introducing regulations in both savings and lending
rates in Venezuela. Starting next Monday banks will have to pay a
minimum refenced to the so called “absorption” rates of the Central
Bank, which today implies 6.5% on savings accounts and 10% on 30 day
CD’s. Similarly, the lending rate will be referenced to the
“assistance” rate of the Venezuelan Central Bank, which implies that
the maximum lending rate, including credit cards, will be set at 28%.
The new regulations also forbid charging commissions for some services,
requiring minimum balances or asking for any form of collateral on
loans.

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