Figure · Assets that do not operate
With a 73% reserve requirement, Venezuelan banking is designed not to lend
The reserve requirement for Venezuelan banks is around 73%. Seven of every ten bolivars deposited cannot be lent.
The effect shows in the size of credit. It equals 2–3% of output, against a reference level of 25%.
The banks are healthy: the default rate is 0.90% and provisions are three times the overdue portfolio. Banking is tiny, and what it needs is to be unlocked.
For a C-suite executive, the signal that matters is the reserve requirement. Lowering it takes no construction and no external financing. It takes a decision by the Central Bank, which must make it without unanchoring inflation.
- 73%
- is the reserve requirement: seven of every ten bolivars deposited cannot be lent
- Source: C4Accel study, series Assets that do not operate · medium confidence
- 2–3% of GDP
- is bank credit, against a reference level of 25%
- Source: C4Accel study, series Assets that do not operate · medium confidence
- 0.90%
- is the banks' default rate; provisions are three times the overdue portfolio
- Source: C4Accel study, series Assets that do not operate · high confidence