Venezuela is planning to move about $6.3 billion in cash reserves mainly from the Bank of International Settlements in Basel, Switzerland, and Barclays Bank in London to unnamed Russian, Chinese and Brazilian banks, The Wall Street Journal reports. The country also plans to move $11 billion in gold abroad to the vaults of the Central Bank of Venezuela in Caracas, the Journal reports.
Venezuelan officials wouldn't comment on the matter, although government officials there have said the country is too dependent on the U.S. dollar.
The plan leaves analysts scratching their heads, wondering why the government would yank assets out of safe countries.
"It's a big risk," says Jose Guerra, a former official at Venezuela's Central Bank, according to the Journal.
(Getty Images photo)
One reason could be that Venezuela is worried it may be forced to pay hefty compensations to large companies seeking to recover money lost in assets seized by Venezuelan President Hugo Chavez.
Arbitration cases against Venezuela are hard to pin down but sizable.
"It's a wide range from $10 billion to $40 billion and beyond," Tamara Herrera, chief economist of Síntesis Financiera, an economic consulting firm based in Caracas, tells the Journal.
"There are many ongoing negotiations; the major ones of course are with oil companies."
Another reason may be that China may want the gold and cash as collateral for money it has loaned to Venezuela.
That's what some Chavez opponents say.
"We think that China, Russia and Brazil have asked Venezuela to transfer the reserves to guarantee the loans that the government has received in recent years," says opposition lawmaker Julio Montoya, according to Bloomberg.
"President Hugo Chavez has not yet approved the plan."
© 2017 Newsmax Finance. All rights reserved.