The Chilean central bank chose to revoke a bilateral credit limit approved to the Reserve bank of Venezuela (BCV) under the Contract on Reciprocal Payments and Credits of the Latin American Combination Association (ALADI). The decision was made due to successive breaches by the Venezuelan monetary authority in the installations due throughout 2017.
“The progressive deterioration of the financial signs of Venezuela and the habits of the BCV in previous years within the structure of this arrangement had actually already inspired the adoption of other steps of a general nature to safeguard the possessions of the central bank of Chile,” stated the Chilean financial authority.
In addition to communicating the revocation to the BCV, the Chilean central bank sent a copy to the ALADI.
“The Post 27 expressly and specifically empowers any central bank that belongs to the ALADI Convention to unilaterally revoke the line of credit given to another reserve bank under its umbrella,” he explained.
The central bank of Chile belongs to ALADI’s Contract of Mutual Payments and Credits, signed by 11 other central banks in the area.
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