The governor of Bolivia’s central bank has said his country faced “a liquidity crisis”, but “not a solvency crisis”, as it runs short of foreign exchange.

One Bolivian bank failed last month after a run on deposits, and regulators plan to repay dollar depositors in local currency. Several observers tell Central Banking that the move could exacerbate Bolivia’s reserves crisis, adding that a new law would not provide more than temporary respite.

In an interview with The Banker, published on May