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Market Analysis: Total Dollarization, Oil, and Institutional Reconstruction in Venezuela
What's crucial isn't whether the bolívar can still exist on paper, but if it still serves real monetary functions. In practice, it has lost much of its utility as a unit of account, a relevant medium of exchange, and a store of value, while the dollar dominates price formation, savings, and a substantial part of benchmark transactions.
Total dollarization in Venezuela is technically feasible, but it's not a quick fix; it requires a politically legitimate transition, a stabilization program with multilateral support, a redefinition of monetary institutional frameworks, and disciplined use of oil revenue.
This analysis is framed ceteris paribus, meaning it does not incorporate assumptions of a future comprehensive privatization of the oil business or the dissolution of PDVSA; these hypotheses may alter the long-term outlook but are not necessary to assess the initial feasibility of an orderly dollarization.
What's crucial isn't whether the bolívar can still exist on paper, but if it still serves real monetary functions. In practice, it has lost much of its utility as a unit of account, a relevant medium of exchange, and a store of value, while the dollar dominates price formation, savings, and a substantial part of benchmark transactions.
Venezuela's GDP in current dollars is estimated to be around $120 billion according to recent estimates derived from the World Bank's base (the 'real' numbers place it somewhere between $90 billion and $110 billion), still far from its historical scale before the collapse.
#PDVSA #petróleo #venezuela #Venezuelacripto #VenezuelanEconomy
What's crucial isn't whether the bolívar can still exist on paper, but if it still serves real monetary functions. In practice, it has lost much of its utility as a unit of account, a relevant medium of exchange, and a store of value, while the dollar dominates price formation, savings, and a substantial part of benchmark transactions.
Total dollarization in Venezuela is technically feasible, but it's not a quick fix; it requires a politically legitimate transition, a stabilization program with multilateral support, a redefinition of monetary institutional frameworks, and disciplined use of oil revenue.
This analysis is framed ceteris paribus, meaning it does not incorporate assumptions of a future comprehensive privatization of the oil business or the dissolution of PDVSA; these hypotheses may alter the long-term outlook but are not necessary to assess the initial feasibility of an orderly dollarization.
What's crucial isn't whether the bolívar can still exist on paper, but if it still serves real monetary functions. In practice, it has lost much of its utility as a unit of account, a relevant medium of exchange, and a store of value, while the dollar dominates price formation, savings, and a substantial part of benchmark transactions.
Venezuela's GDP in current dollars is estimated to be around $120 billion according to recent estimates derived from the World Bank's base (the 'real' numbers place it somewhere between $90 billion and $110 billion), still far from its historical scale before the collapse.
#PDVSA #petróleo #venezuela #Venezuelacripto #VenezuelanEconomy
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