Bolivia's Central Bank (BCB) has embarked on a significant initiative to reassure its citizens and stabilize the financial system by commencing the direct return of US dollars in cash to small savers. This strategic move aims to restore certainty regarding foreign currency provision, benefiting a vast segment of the population and small businesses across the nation.
Restoring Confidence for Small Savers
The BCB's program targets individuals and legal entities holding savings deposits of USD 1,000 or less, with a specified cutoff date of December 31, 2025. This encompasses over 770,000 individual savers, representing more than 80% of dollar depositors, and an additional 20,000 small businesses, making up 75% of companies in this segment. The distribution process will be facilitated through all authorized financial institutions (EIFs) throughout Bolivia, allowing eligible account holders to withdraw their foreign currency funds directly. This initial phase alone is projected to return approximately USD 48 million to these beneficiaries.
A Strategic Shift in Monetary Policy
To fund this crucial operation, the BCB has implemented a modification to the legal reserve requirement (encaje legal) in foreign currency. This mandatory reserve, which financial institutions traditionally hold with the Central Bank, has been adjusted and reduced. By altering this percentage, the BCB effectively liberates a substantial amount of dollars previously held in reserve, enabling banks and other entities to directly return these funds to their customers. This innovative approach underscores the BCB's commitment to proactively address the dollar shortage and bolster public trust in the financial system. The authorities have indicated that this is merely the "first step," with further plans underway to assist additional groups of depositors in the future.
