Initially Central Bank (BCV) director Domingo Maza Zavala denied that the BCV made such a transfer, as President Chavez had claimed while he was in Brazil last week.

Maza Zavala corrected his initial statement, saying that indeed the BCV withdrew up to $20 billion from U.S. treasury certificates of deposit and placed them in the Swiss bank because, “the U.S. Dollar has been depreciating relative to the Euro … it was thus considered convenient…” 60% of Venezuela’s foreign reserves are now placed in Euros and 40% in U.S. dollars, according to Maza Zavala. The decision to make the transfer had been reached about four months ago and little by little the reserves have been transferred to Europe since then.

Venezuela’s foreign reserves are currently at $30 billion, following a withdrawal of $2 billion that was recently placed in a newly created development fund. An additional $4 billion is to be withdrawn soon, which would also be placed in this development fund, in accordance with a new Central Bank law that allows “excess” reserves to be used for repayment of foreign debt and for purchases abroad. Last week President Chavez had said that the Central Bank moved the foreign reserves into Euros mainly because of “threats” from the U.S., which he did not specify. Later some government representatives suggested that in a crisis with the U.S., the Bush administration could freeze Venezuela’s assets in the U.S.

Economists who sympathize with the opposition argued that the BCV is following Chavez’s orders, even though the bank is supposed to be autonomous. Also, some criticized that interests rates in Europe are about 2% lower than in the U.S., which would mean a loss of several hundred million dollars to Venezuela per year, if foreign reserves are invested there instead of the U.S. “The BCV is now nothing other than an office of the executive. When the Central Bank acts on political terms, the benefit is irrelevant,” said Benito Raul Losada, a former Central Bank president.

Central Bank representatives denied that any of its decisions with regard to the placement of foreign reserves were made under pressure from the president or due to political considerations. Rather, the decision to move the reserves was purely economic, based on the high U.S. deficit and the dollar’s depreciation