Guacara is not Basel

The credit portfolio of the Venezuelan banks, which in 1982 amounted to 16,000 million dollars, by June 2002, in constant 1982 dollars, barely reached 3,300 million dollars, that is, 21% of that of 1982. Being the case that levels as low as these have not been seen since the end of 1996.

In an article that I published in June 1997, I warned about the danger that, faced with the panic of falling into another banking crisis, we would exaggerate banking regulations, forgetting the main function of banking, which should be none other than be an active agent in the economic development of the country and for which the license is granted.

Since then, I have argued in multiple articles that we have to take care of the Basel banking regulations, which as part of the globalization process, seek to be imposed throughout the world, since these, although they may be logical for a developed country, , which perhaps only seeks to take care of its money, may be too strict for a developing country like ours.

You will then understand the reason for my anguish, when in a full-page interview published in a national newspaper, the new superintendent of banks did not mention a word about how banking can promote economic growth and limited himself to testifying about restrictive aspects of the regulation, with phrases such as: “we are the strategic ally of the system to guarantee deposits…” and “I have set the objective of adapting the system's regulations to the fundamental principles of Basel.”

Given the deep economic crisis in which we find ourselves immersed, if I were superintendent, on the contrary, I would do nothing other than try to determine if the current regulations could, in some way, be unnecessarily slowing down the granting of credits and, if so, Thus, I would proceed to modify them... whatever Basel says.

In any case, it should be noted that the impact that one or another type of banking regulation may have on the health of the financial system will always be infinitely less than that on the real health of the economy in which banking operates.

If there is something worrying about globalization, it is that that category of dangerous public officials, who limited themselves to developing regulations from their air-conditioned offices in Caracas, ignoring the real world, continue doing the same today, but from even more remote offices... in Basel.

Translated from article published in TalCual, Caracas, August 14 2002