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LatinNews Daily - 22 December 2020

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In brief: De facto dollarisation continues in Venezuela

* Felipe Capozzolo, the president of Venezuela’s national council of retailers (Consecomercio), has reported that between 70%-80% of transactions carried out in Venezuela are made using US dollars, as continued inflation and the loosening of restrictions on foreign currencies have furthered ‘de facto dollarisation’ in the country. Capozzolo claimed that US dollars provide “the opportunity for Venezuelans to have a currency that maintains value, that is tradeable, and that fulfils the functions that a currency should have”. However, the Consecomercio president also noted that the informality of this dollarisation is causing problems, especially regarding inequalities in who is able to access foreign currencies; back in February, the government led by Nicolás Maduro loosened restrictions on private companies using foreign currencies, in an attempt to boost the country’s struggling economy, but in November the government took action to protect the national currency (the bolívar soberano), for instance by introducing a new tax on financial transactions carried out using foreign currencies.