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The Capital Controls in Venezuela

Capital controls are critical for any country, including Venezuela, as they provide an opportunity to have a particular rate of exchange for a long time without a threat for the reserves of both hard and foreign currencies (Schulze, 2000). Unfortunately, such control is rather expensive for the investors, which makes them reluctant to continue investing. Capital controls play a vital role in the life of a Venezuela, as they control capital flowing and prevent political and economic problems, such as crises.

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The black market in Venezuela is connected with the trade of currency. It is called black because such actions are conducted with the help of organizations and institutions that should not be consulted. In many cases, they have no license and are not recognized by others. In other words, they occur to be involved in illegal affairs. The gray market, on the other hand, is not connected with the breach of the law. It can be seen as a usage of the legal process in order to conduct some actions that are generally called unethical. They do not coincide with the views and ideas presented by the government. In this way, such a market remains legal but is likely to be inappropriate in the eyes of the government and may cause political issues.

In the current situation, the city requires $20,000, as it needs to pay supplier bills $30,000 and one-third of this sum was received due to the CADIVI approval. There are several ways in which Santiago can deal with a shortage. They can get $20,000 from the gray market or from the black one. Still, the best option is to refer to the gray market. Its exchange rate is the cheapest, which is the main advantage.

Reference

Schulze, G. (2000). The political economy of capital controls. Cambridge, UK: Cambridge University Press.

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StudyCorgi. 2022. "The Capital Controls in Venezuela." May 18, 2022. https://studycorgi.com/the-capital-controls-in-venezuela/.

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StudyCorgi. (2022) 'The Capital Controls in Venezuela'. 18 May.

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