That the Guatemalan Central Bank argues against dollarization is no surprise for anyone, as its very reason for existence is questioned with it. Accordingly, its president María Antonieta de Bonilla stated that the concept has more disadvantages than advantages. As advantages, she listed “less monetary crisis, lower risk premiums and tighter integration with the U.S. currency, benefitting importers and exporters”. As disadvantages, she listed lost revenue due to losing the “primary emission of currency”, and the bank’s function as “lender of last resort”.

But, as noted in an article in Sigloxxi.com, “what worries authorities the most is that by dollarizing they would lose all control over monetary policy, as the change would eliminate most monetary tools, such as varying interest rates to moderate economic cycles and external shocks”.

A number of independent economist analysts interviewed in the article also opposed the idea of dollarizing Guatemala.

Source: sigloxxi.com

More on this topic

New President at Banguat

September 2010

The current Superintendent of Banks of Guatemala, Edgar Barquin, will take over the presidency of the Central Bank of Guatemala on Friday.

Barquin is a CPA, auditor, attorney, notary and was one of the creators of Guatemala president Alavaro Colom´s economic plan. He will replace Maria Antonieta Del Cid de Bonilla.

Guatemala Changes Currency Rate Calculation

June 2010

The new calculation will come into effect on July 16th; it will only consider transactions larger than $20.000.

Currently, the Central Bank includes all foreign exchange market transactions to calculate an average rate.

“Carlos González, analyst at Asies (Social Estudies Association), considers that this will allow for faster transactions, as it will eliminate from the calculation a lot of small, meaningless transactions”, reported Sigloxxi.com.

Tight money: bad remedy for inflation

July 2008

No matter what the cause, the old remedy for rising inflation was restricting liquidity with the increase of interest rates and a virtual paralyzing of credit markets, says César A. Garcia in a column in the Guatemala newspaper Prensa Libre.

Garcia continues: The President of the Bank of Guatemala, Maria Antonieta de Bonilla, announced in an interview Monday that the Monetary Committee will stop the rise in prices, which create an impoverishing rate of inflation of 12 percent per year.

Guatemala mulls its economic situation

July 2008

The president of the Guatemala's Central Bank, María Antonieta de Bonilla, is worried about the current economic situation in hre country and predicts the coming of stricter credit conditions.

Del Bonilla made her comments in an interview with the newspaper Prensa Libre, following an announcement by the National Statistics Institute that reported an annual inflation rate of 13.56 percent in June, far above this year's goal of 5.5 percent plus or minus 1.5 percent.