Cadivi looks to tighten use of credit cards abroad

Tuesday, October 21, 2003

Venezuela's foreign exchange commission Cadivi is looking to introduce stiffer sanctions on the illegal use of local credit cards outside the country, local press reported.

Cadivi is currently in talks with Venezuela's banking regulator (Sudeban), central bank BCV and banking and credit card associations to decide on the mechanisms which could be developed to more closely regulate the use of local credit cards abroad.

Cadivi is keen to strictly regulate credit limits on credit cards used abroad and has formed two separate study groups to determine the technological and judicial options, local daily El Universal quoted Cadivi director Edgar Hernandez as saying.

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Venezuela's central bank is keen to introduce stricter sanctions and clear regulations for the use of local credit cards abroad to avoid the abuses that took place when the facility was first introduced nine years ago, central bank executive Domingo Maza Zavala told state press agency Venpres.

When credit card use was extended beyond the country's borders between 1994-1995 the tendency among the Venezuelan population was to abuse this measure, Maza said, adding that during this period " everybody overdrew and these debts still exist."

Venezuela's government is expected to introduce a new system for foreign exchange transactions this month.

The country's President Hugo Chavez ordered a ban on foreign exchange transactions in February after a two-month nationwide strike to depose him fell apart. But the strike seriously disrupted the economy, especially the state run oil industry, a key source of government revenues.

Cadivi was subsequently empowered to allocate scarce foreign currency to priority sectors. Chavez has threatened to withhold foreign currency from businesses that participated in the strike.