Profundo de vista de la utilidad de la omos (operaciones de mercado abierto)

Which is the key to keep our economy stable? Treasury bonds and notes have been the best source of regulation to the bullish inflation indexes in Bolivia, a country with an incredible record of instability in it’s economy. Despite the legal reserve, open market operations have become the best way of controlling the inflation rates in our country with an efficient system exclusively focused in maintaining the economy under control. On the last couple of years Bolivia has suffered a fall on the yields of treasury bonds and notes, in the charts that the central banks published we can see how the increasing growth of our economy is lowering these rates, this occurred because the inflation rates in Bolivia, are now being controlled in a better way, so there is no urgency of issuing bonds or notes to reduce the liquidity in the market, for that the yields are not that higher. For one side, people in not that interested now as much as they were before in public values, because they can get better yields from sources of investment different than the ones that the government offers, and this is not so good for people because these rates use to be higher in the past years, for example around 2009 the yield the treasure of the nation paid to the people oscillated between 10% and 12%, and that was so attractive and useful to people because the treasure of the nation was paying you much more than the rest of the market in the country, but this happened because our country was suffering a slow grade of economy development and the inflation rates were pretty high. But for the other side we can see how in the past months, our country has reached an elevated grade of economy growth that we haven’t lived in a long time, so now Bolivia is getting richer, the inflation rates are low and controlled so the economy doesn’t need as much a reduction on the liquidity in the market as they used to need before to control the elevated rates of inflation, so the yields of the public values had been reduced. A different situation on the crisis A dark period draws a big spot in the history of our economy, an economic phenomenon caused not only fear in the financial system but also on the streets of our country. Around the 80’s when the hyperinflation hit the country every single person in the same was affected, the prices went up to the heaven, the inflation reached a record of 7000% aprox. Everything was going to the ground with projected inflation rates of 21000% in the next months, until a group of people of the central bank create an idea to solve this by managing serious changes in the financial system of the country, so they solved the problem stabilizing the economy once again in Bolivia. The principal causes of this phenomenon were:  The government was issuing money in high levels  The government wasn’t solvent  The central bank had to purchase the bonds the government was issuing In the following chart we can see the unbelievable increase in the inflation rate by comparing the price of the American dollar.

Year Month $ Official $ Parallel

1982 December 200 283

1983 December 500 1,244

1984 June 2,000 3,250

December 9,000 22,100

1985 January 9,000 60,100

February 50,000 120,000

March 50,000 121,000

April 50,000 156,600

May 75,000 248,500

June 75,000 448,000

July 75,000 801,000

August 75,000 1,050,000

The point of explaining a little bit what was the hyperinflation is to demonstrate how the

public values we’ve being studying, would have been helpful. At the beginning of the crisis

there was a perfect time to issue treasury bonds and notes to people, those haven’t been

created by that time, but the idea is with

...