The Strategist

Venezuelan authorities are getting ready to denominate the bolivar

05/30/2018 - 15:05

Venezuela warned enterprises that they should not slow down operations during denomination planned by the authorities. However, critics believe that monetary reform could lead to chaos due to the speed of its conduct.

Government of Venezuela via flickr
Government of Venezuela via flickr
Venezuelan President Nicolás Maduro said in March that the country’s currency, the bolivar, will be denominated on June 4, and the central bank has already published photographs of new banknotes adorned with Venezuelan historical figures.

Yet, banks did not receive new bills and did not have the opportunity to tune ATMs to work with them according to two sources in the financial industry.

Critics from the opposition say that Maduro is risking to repeat the chaos of the end of 2016, when the government withdrew the largest bill out of circulation. Then, there were long lines at ATMs, and then a wave of protests and robberies swept.

Recall that Venezuelan President Nicolas Maduro announced in March the denomination of the bolivar, the national currency of the country. It was planned that new bills will be put into circulation on June 4.

According to Maduro speaking on the local television channel, he decided to "remove three zeros from the current money."

President also said that the Venezuelan crypto currency El Petro can be bought for euro, as well as for Russian rubles and for yuan.

Four special economic zones will be created to use the virtual currency: Margarita Island, Los Roques Archipelago, as well as the Paraguana and Ureña zones.

Critics explain the current situation by the hard currency controls imposed by the late President Hugo Chávez 15 years ago, as well as excessive printing of money. The rate of the bolivar fell by about 98% against the dollar only over the past year.

The administration of Venezuela's President Nicolas Maduro connects the problems with the economic war, allegedly led by opposition and business leaders with the help of Washington. The authorities have not been publishing data on inflation for more than two years.

Venezuela is experiencing a deep economic, political and humanitarian crisis. The country's government is in debt, and it is still unclear how it will make mandatory payments this year. The IMF predicts that in 2018, inflation in the country will reach 13,000%, and GDP will collapse by 15%.