Venezuela is struggling with hyperinflation, so the central bank has once again decided to denominate the Venezuelan currency – the bolivar. This time by six zeros. In the last 13 years, the exchange rate in Venezuela has been changed several times – a total of 14 zeros have been cut – we read in Rzeczpospolita.
“All sums expressed in national currency will be divided by one million,” announced Venezuela’s issuing institute. The central bank will issue new banknotes with a face value of 5, 10, 20, 50 and 100 bolivars and a one-dollar coin, Communications Minister Freddy Nanez explained on Twitter.
Bolivar denomination – Venezuela fights against hyperinflation
“The current decision will take effect on October 1 with the issuance of a new means of payment, a digital bolivar. The purpose of this move is to facilitate the use of the currency,” explained the bank. A digital bolivar in the exchange system via SMS will facilitate payments and transfers between users. denomination and digital money will not affect the value of the bolivar “- we learn from Rzeczpospolita.
The daily added that this is the third time in the last 13 years that the central bank has used a denomination due to the worst economic crisis in Venezuela’s history. “In August 2018, the government subtracted five zeros, after abolishing three in 2008. In 2018, the government of Nicolas Maduro changed the name of the national currency to a sovereign bolivar,” Rzeczpospolita explained.
The economic crisis and hyperinflation in Venezuela
The newspaper stressed that Wnezuela was once a wealthy oil country, but is now “in its fourth year of hyperinflation, and has been in recession for eight years.” “After 5 months of this year, prices increased by 265 percent, in 2020 inflation amounted to almost 3 thousand percent, a year earlier over 9500 percent, and in 2018 it was a record 1.8 million percent.” – Rzeczpospolita refers to the data of the Venezuelan central bank.
“There is such a shortage of banknotes in circulation that long lines in front of banks have become commonplace. Transactions in local currency are usually made by debit cards or bank transfers rather than cash. Inflation is so severe that the everyday economy has turned into dollar terms, many stores quote prices In May, the government tripled the minimum monthly wage, but the new sum was still too small to buy a kilogram of meat, “the daily reads.
– This decision was expected. It was simply necessary because billing and accounting procedures became virtually impossible for companies. People used abbreviations to talk about prices of thousands instead of millions, economist Cesar Aristimuno, director of Aristimuno Herrera & Associates, told AFP.
“Another economist Luis Vicente León and the head of the Datanalisis company, criticized this denomination, because cutting these zeros does not solve the reason that caused the whole problem. Without resolving the essence of this issue, we will have the same problem in a few months” – emphasized Rzeczpospolita.
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