Bolivian central bank issues “Christmas bonds” to raise liquidity

This Tuesday, the Bolivian Central Bank (BCB) issued “BCB Christmas Bonds” at an annual interest rate of 6.5 percent for the general public to gather liquidity in the open market and control inflationary effects.

According to a BCB report, the bonds will be sold from Oct. 18, 2022, to Feb. 28, 2023.

BCB is offering an annual interest rate of 6.5 percent for 273 days (nine months) and 6.95 percent per year for 546 days (one and a half years).

BCB President Edwin Rojas said in a press conference that these bonds provide a reliable, profitable, safe investment alternative for small savers in urban and rural areas.

“Last year, we reached about 400 million Bolivianos, so our goal is to maintain at least or exceed last year’s level,” he explained.

On Tuesday, economist Luis Ballivián told Xinhua that this measure generally aims to control the inflationary effect by capturing excessive liquidity.

“The measure aims to remove excess liquidity from the market and contain inflationary pressures at the end of the year,” he added.

However, he said, this instrument offers the Bolivian population an investment alternative with attractive yields that encourages saving and improves the interest rates paid by the financial system.

According to the expert, the BCB pursues a “countercyclical” monetary policy, meaning that it withdraws liquidity in times of inflationary pressure.

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