2023-10-02 12:21:00
An exchange house worker counts Chinese yuan bills in La Paz, Bolivia. (AP Photo/Juan Karita)
The government of Luis Arce ordered Bolivian private banks to attend a meeting with the envoys of the Bank of China and the Industrial Bank of China, to replace with Chinese yuan the dollars that have been missing in Bolivia since the beginning of the year.
You may be interested: The two largest banks in China promote transactions in yuan in Bolivia
All Bolivian bank executives had to attend the meeting and some of them requested individual meetings to find out how the Chinese currency might replace that of the United States.
Economist Jaime Dunn warns that one of the two Chinese banks that announces their arrival in Bolivia, the Bank of China, has been operating in Argentina for fifteen years but has not resolved the shortage of dollars in that neighboring country.
You may be interested in: The influence of the Chinese regime in Bolivia advances: banks promote the use of yuan in commercial transactions
Furthermore, the economist recalls that 89% of the world’s commercial operations are carried out in dollars while only 2% of them are carried out in yuan, as confirmed by figures released by Bloomberg.
Dunn says that at this moment there are five different prices of the dollar in Bolivia: 1) the official one, 2) the one offered by private banks, 3) the one at the exchange houses, 4) the one at the borders and 5) the one at the cryptocurrencies.
An informal currency trader holds US dollar bills on a street, in La Paz (REUTERS/ Claudia Morales)
Between these five quotes there are abysmal differences, because they range from Bs 6.96 per dollar for the official price to Bs 8.30 for some borders and Bs 7.10 for cryptocurrencies.
You may be interested: For the first time, an undersecretary of the United States visited Chocó: this was Todd Robinson’s trip
The problem is that at this moment dollars are scarce in the Bolivian economy, but the national currency is also decreasing. For the first time in a long time, banks have more money in deposits than in the loan portfolio.
The government of Luis Arce maintains the criterion that, in the absence of dollars, the yuan is good, but businessmen know that with the Chinese currency it will be difficult to do business abroad. And these businessmen know that the Chinese paid for Russian oil in yuan, but when the Russians wanted to use those yuan to pay for Chinese food, the Chinese did not accept them back.
A gold mine that uses mercury to extract the metal in the Beni River (REUTERS/Sergio Limachi)
It is likely that the Chinese banks brought in by President Arce will want to operate with the Chinese companies that exploit gold in the Amazon rivers of Bolivia, just as they do in the rivers of the same basin in Peru, Ecuador, Colombia and Venezuela, without forgetting Brazil.
At the moment, Chinese miners are part of the illegal mining of Bolivia and other countries in the region, which would force them to legalize and pay taxes similar to the rest of the mining.
In this case, according to economist Dunn, the problem is that illegal mining, which enjoys special tax treatment, is part of the scheme designed so that the Bolivian government can survive.
The first item that generates dollars for the Bolivian State is illegal mining, followed by drug trafficking, remittances from citizens living abroad and agricultural exports.
Here, the figures are mixed, because it happens that smuggling disguises some numbers. According to Dunn, we should not be surprised if in December the southern department of Tarija is revealed as Bolivia’s leading soybean exporter, even though it does not produce a single grain of the oilseed.
At the moment, some 1.8 billion dollars entered Bolivia from the export of soybeans from Tarija, although it is Argentine soybeans that arrived in Bolivia as smuggled.
Like Peter Andreas, in his book “Smuggler Nation” (smuggling country, referring to the United States), Jaime Dunn believes that smuggling is a business activity capable of creating economic powers.
Now, it is true, drug trafficking is also involved in Bolivia, which Dunn estimates at regarding 1.2 billion dollars per year, although he admits that it might be more, much more.
After all, a kilo of cocaine costs 1,000 dollars in Chapare and 130,000 in Moscow. And it is not because the ruble is weak, which it is, but because of all the payments, legal and illegal, that that kilo must pay in such a journey.
1696257247
#China #impose #currency #Bolivia
