The 1994 banking crisis occurred in Venezuela when a number of the banks of Venezuela were taken over by the government. The first to fail, in January 1994, was Banco Latino, the country's second-largest bank ($1.3 billion bailout [1] ). Later, two banks accounting for 18% of total deposits (Banco Consolidado and Banco de Venezuela) also failed. [2] The crisis led the President Rafael Caldera to suspend constitutional rights in order to impose price controls, exposure of deep corruption in the Venezuelan banking system, and the resignation of Finance Minister Julio Sosa Rodriguez. [3] [4] [5]
The Venezuelan government spent $5 billion from January to June 1994 to try to rescue 8 banks, which were all declared bankrupt in June 1994. State officials suggested that most of the public funds for recovery had been stolen by bankers fleeing the country's crisis. At this point, reserves at the Central Bank dropped from $12 billion to $8 billion. [1]
On 9 August 1994, Banco de Venezuela became the tenth bank bailed out by the Venezuelan government during the crisis, with the government taking a majority stake for an estimated at US$294m. [6] In total, between January 1994 and August 1995 17 of the country's 49 commercial banks, as well as some subsidiaries, failed - representing 53% of the system assets. [7] Estimates of the total cost of the bailout range from 18 to 31% of GDP; [8] one estimate gives the total cost of the bank bailouts as 1.8 trillion Bolivars, or $12bn. [2]
Economic liberalization in the early 1990s and lax banking supervision had laid the seeds for the crisis, which was then triggered by the cumulative effects of a collapse in the oil price, which led to sharply reduced government spending and weakened the Venezuelan economy. [2]
Ruth de Krivoy, who was President of the Central Bank of Venezuela at the height of the crisis in 1994, later published a book on the episode. [9]
The economy of Spain is a highly developed social market economy. It is the world's 15th largest by nominal GDP and the sixth-largest in Europe. Spain is a member of the European Union and the eurozone, as well as the Organization for Economic Co-operation and Development and the World Trade Organization. In 2023, Spain was the 18th-largest exporter in the world. Meanwhile in 2022, Spain was the 15th-largest importer in the world. Spain is listed 27th in the United Nations Human Development Index and 36th in GDP per capita by the World Bank. Some main areas of economic activity are the automotive industry, medical technology, chemicals, shipbuilding, tourism and the textile industry. Among OECD members, Spain has a highly efficient and strong social security system, which comprises roughly 23% of GDP.
Rafael Antonio Caldera Rodríguez was a Venezuelan politician and academician who was the 46th and 51st president of Venezuela from 1969 to 1974 and again from 1994 to 1999, thus becoming the longest serving democratically elected politician to govern the country in the twentieth century.
The Mexican peso crisis was a currency crisis sparked by the Mexican government's sudden devaluation of the peso against the U.S. dollar in December 1994, which became one of the first international financial crises ignited by capital flight.
A bailout is the provision of financial help to a corporation or country which otherwise would be on the brink of bankruptcy. A bailout differs from the term bail-in under which the bondholders or depositors of global systemically important financial institutions (G-SIFIs) are forced to participate in the recapitalization process but taxpayers are not. Some governments also have the power to participate in the insolvency process; for instance, the U.S. government intervened in the General Motors bailout of 2009–2013. A bailout can, but does not necessarily, avoid an insolvency process. The term bailout is maritime in origin and describes the act of removing water from a sinking vessel using a bucket.
Banco Intercontinental was the second largest privately held commercial bank in the Dominican Republic before collapsing in 2003 in a fraud tied to political corruption.
The 2002 Uruguay banking crisis was a major banking crisis that hit Uruguay in July 2002. In this, a massive run on banks by depositors caused the government to freeze banking operations. The crisis was caused by a considerable contraction in Uruguay's economy and by over-dependence on Argentina, which experienced a strong phase of an economic meltdown itself in late 2001. In total, approximately 1/3 of the country's deposits were withdrawn and five financial institutions were left insolvent. The value of the Uruguayan peso fell, losing nearly half of its value against the U.S. dollar in 2002.
Fobaproa was a contingencies fund created in 1990 by the Mexican government, led by then dominant Institutional Revolutionary Party (PRI) to attempt to resolve liquidity problems of the banking system. The contingencies fund was applied in 1995 during the Mexican peso crisis to protect Mexican banks. In 1998, it was replaced by Instituto para la Protección al Ahorro Bancario, Mexico's current deposit insurance agency.
"Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected that their failure would be disastrous to the greater economic system, and therefore should be supported by government when they face potential failure. The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois. The term had previously been used occasionally in the press, and similar thinking had motivated earlier bank bailouts.
The Republic of Venezuela, also sometimes referred to as the Fourth Republic of Venezuela[es], was a democratic republic first established in 1953, and replaced in 1999 by the Bolivarian Republic of Venezuela. Venezuela saw ten years of military dictatorship from 1948 to 1958. After the 1948 Venezuelan coup d'état brought an end to a three-year experiment in democracy, a triumvirate of military personnel controlled the government until 1952, when it held presidential elections. These were free enough to produce results unacceptable to the government, leading them to be falsified and to one of the three leaders, Marcos Pérez Jiménez, assuming the Presidency. His government was brought to an end by the 1958 Venezuelan coup d'état, which saw the advent of democracy with a transitional government under Admiral Wolfgang Larrazábal in place until the December 1958 elections. Prior to the elections, three of the main political parties, Acción Democrática, COPEI and Unión Republicana Democrática, with the notable exclusion of the Communist Party of Venezuela, signed up to the Puntofijo Pact power-sharing agreement.
The 2008–2014 Spanish financial crisis, also known as the Great Recession in Spain or the Great Spanish Depression, began in 2008 during the world 2007–2008 financial crisis. In 2012, it made Spain a late participant in the European sovereign debt crisis when the country was unable to bail out its financial sector and had to apply for a €100 billion rescue package provided by the European Stability Mechanism (ESM).
The European debt crisis, often also referred to as the eurozone crisis or the European sovereign debt crisis, was a multi-year debt crisis that took place in the European Union (EU) from 2009 until the mid to late 2010s. Several eurozone member states were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).
The 2009–2010 banking crisis occurred in Venezuela when a number of the banks of Venezuela were taken over by the government, after "the revelation that several banks owned by Hugo Chavez supporters were in financial trouble after engaging in questionable business practices. Some were seriously undercapitalized, others were apparently lending large sums of money to top executives, and at least one financier couldn't prove where he got the money to buy his banks in the first place." In November and December 2009 seven banks were taken over, accounting for around 12% of total deposits. In 2010 more banks were taken over. The government arrested at least 16 bankers and issued more than 40 corruption-related arrest warrants for others who had fled the country.
Pedro Tinoco (1927–1993) was a Venezuelan businessman and politician.
The second presidency of Rafael Caldera took place from 1994 to 1999. Caldera had previously been President from 1969 to 1974.
The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.
Debt crisis is a situation in which a government loses the ability of paying back its governmental debt. When the expenditures of a government are more than its tax revenues for a prolonged period, the government may enter into a debt crisis. Various forms of governments finance their expenditures primarily by raising money through taxation. When tax revenues are insufficient, the government can make up the difference by issuing debt.
The 2012–2013 Cypriot financial crisis was an economic crisis in the Republic of Cyprus that involved the exposure of Cypriot banks to overleveraged local property companies, the Greek government-debt crisis, the downgrading of the Cypriot government's bond credit rating to junk status by international credit rating agencies, the consequential inability to refund its state expenses from the international markets and the reluctance of the government to restructure the troubled Cypriot financial sector.
Sareb is the bad bank of the Spanish government. Its purpose is to manage and disinvest high-risk assets that were transferred to it from the four nationalized Spanish financial institutions. The company was formed in 2012.
Ruth Osterreicher de Krivoy is a Venezuelan economist specialized on political, monetary and fiscal dynamics. During the early 1970s, she had been vice president of research at the Central Bank of Venezuela, where she played an active role in strengthening economic research as a major instrument of support for monetary policy. In 1992, two months after an attempted coup d'état by Hugo Chavez, she became president of the Central Bank of Venezuela. Her appointment seemed a natural choice, given both her extensive experience and her firm belief in Central Bank independence. She resigned in 1994, amid the Venezuelan banking crisis. De Krivoy wrote a book about the crisis, and has continued to voice concerns about the loss of political independence of the Central Bank's governors.
The dollarization of Cuba refer to macroeconomic policies implemented with the aim at stabilising the Cuban economy after 1993. They were initially enacted to offset the economic imbalances which was a result of the dissolution of the Soviet Union in 1991. The main aspect of these reforms was to legalize the then illegal U.S. Dollar and regulate its usage in the island's economy.