Colombia Reassures on Currency Market
BOGOTA, Colombia - The Colombian government moved to calm fears that the opening of the foreign exchange market would lead to a rash of money-laundering by drug-traffickers.
"That is not going to happen," said Finance Minister Rudolf Hommes.
Colombia's drug cartels supply about 80% of the cocaine used in the United States and are expanding markets in Europe. Colombian authorities say that a relatively small amount of the proceeds from the drug trade make their way back to Colombia.
System Is Scrapped
The government ended last week the 17-year-old system under which Colombians went directly to the Bank of the Republic, the central bank, to change foreign currency into Colombian pesos.
Now Colombians can change currency at any commercial bank of financial institution. But the government decreed that Colombians receive the full value of the currency in pesos only if they wait 90 days. If they want all the money immediately, they must take a discount of up to 13%. The steps were taken to combat inflation, running at more than 31% a year. Officials said large amounts of foreign exchange were flowing into the country, thereby swelling the domestic money supply and fueling inflation.
Farmers and insdustrialists sharply criticized the change, saying if effectively revalues the peso and discriminates against exporters.
Carlos Angel, chairman of the National Association of Industrialists, said earlier this week that the value of the Colombian currency would now be set by money launderers.
Mr. Hommes rejected Angel's criticisms. Bank buying foreign currency had a duty to ask for documents to prove the currency came from legitimate sources, he said.
News reports said a new tax on exchanging foreign currency would allow authorities to detect people who frequently changed money and so would counter money-laundering.