The Bolivian government is contemplating using the Chinese yuan to replace the US dollar for international trade settlements. Bolivian President Luis Arce has directed the central bank to conduct research on whether the recent use of the Chinese currency in Brazil and Argentina could be applicable to Bolivia.
In a meeting with journalists, Arce revealed that several countries around the world are facing dollar illiquidity, including Argentina, Brazil, France, and some Arab countries. These countries have opted not to trade in dollars as a solution. Bolivia recently passed a law to sell half of its gold reserves for dollars to address its liquidity issues.
Meanwhile, the National Statistics Institute of Argentina (INDEC) has released price data for April, indicating a 108.8% year-over-year inflation increase. This figure is higher than the 104.3% recorded in March. Food and beverage items contributed most to the inflation rise, with prices increasing by 10.1%. The Argentine government attributed the inflation rise to exchange rate unrest in financial dollar markets, which prompted preventive price hikes in many products and services.
In response to Venezuela’s inflation crisis, Steve Hanke, a professor of applied economics at Johns Hopkins University, has proposed implementing a currency-board system to mitigate the issue. Hanke, who is currently an economic advisor to presidential candidate Roberto Henriquez, believes that the solution lies in exchanging Venezuelan bolivars at a fixed rate against the US dollar. He stated that this system could eliminate inflation in Venezuela within 30 days, bringing the inflation rate to a level similar to that of the US.
Hanke has already directed similar programs in Estonia, Lithuania, Bulgaria, and Bosnia and Herzegovina.