Bolivia: Tight money, bigger anchors needed

Research evidence excerpt

Bolivia: Tight money, bigger anchors needed

Juan Goldin Latin America Economic Research J P M O R G A N(57 601) 869 8746 22 June 2026

juan.goldin@jpmchase.com

However, this issuance has been more than offset by sizable, above target, monetary

contraction via open market operations, amounting to a US$1.5bn equivalent year to date.

The public sector also contributed to the tightening in local liquidity: the BCB’s net domestic

credit to the non‑financial public sector recorded an accumulation of resources of a US

$349mn equivalent, mainly supported by stronger tax revenues early in the year and

complemented by a more dynamic placement of Treasury securities in the local market.

Taken together, these actions translated into a marked contraction in broad money, down by

a US$1.5bn equivalent through May (and contracting in real terms throughout the year). Our

estimates point to mild monetary issuance in June on seasonal factors. Even so, on a

seasonally adjusted basis, monetary aggregates continued to contract in June, with both broad

money and currency in circulation declining.

These contractionary measures, together with improved external liquidity—mainly linked to

the sovereign bond issuance—have helped contain volatility in the reference exchange rate

despite heightened uncertainty around protests; the FX gap has remained slightly above 40%

since April. This was reinforced by the elimination of Chapter VII of the Foreign Exchange

Operations Regulation, which the authorities frame as confirming the definitive

abandonment of the previous fixed exchange‑rate regime given that private‑market

transactions are now executed without regulatory restrictions at the reference exchange rate,

according to the BCB. The BCB has indicated it will continue to pursue strategies to