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Venezuela has removed six zeros from its trade to create a bolívar system that can be effectively managed and restored after many years.
On Friday, new bolívar records began to be published, with one new bolívar 1m old. Currently there are bolívars of about 4.2m to the dollar, which is why one new bolívar is worth about 24 US cents. These new entries range from five to 100 bolívars and there is one bolívar coin.
This is the third time that Venezuelan security officials have cut the money. In 2008, President Hugo Chávez cut three zeros in the books and in 2018, amid high inflation, his successor and current leader Nicolás Maduro removed five others and reduced the amount by 95 percent.
The new currency comes with a change of names. This is now a “digital bolívar”, although it is not digital than any other currency. The old body was “emperor bolívar” and the first was “strong bolívar”.
The removal of the zodiac should make life easier for the long-suffering Venezuelans who have to deal with alarming numbers, although it may not have much economic significance.
“The only thing is that bank transfers are zero,” said Henry Andrade, a fruit and vegetable seller from the western Táchira border with Colombia. “Here in the village where we live the only money that is spread by the Colombian papayas and dollars. The only thing we use bolívars is to buy money. ”
Venezuelan treasures fell since Maduro came to power in 2013, and the country has been plagued by inflation.
Steve Hanke, a professor of economics at Johns Hopkins University, says the first low-powered bout, from 2016 to 2019, lasted 28 months – the fifth longest than ever. The second bout in 2020 lasted nine months.
According to the Venezuelan Observatory of Finance (OVF), a non-governmental organization that estimates prices rise differently, hyperinflation began in 2017 and did not stop, making it the second longest in the world, surpassing Nicaragua in the late 1980s. .
Rising fixed prices encouraged people to start spending dollars. Although Venezuelans spend a lot of money today, for example when paying off debts, they tend to pay with credit cards to avoid overdrafts.
“Selling money has helped because it allows things to be stable and stable,” says Carmen Gutiérrez, 62, who owns a small clothing store in Caracas.
Local consultants Ecoanalítica said more than two-thirds of the economy is Venezuela had been made into foreign currency, mainly dollars.
In recent months, the swelling is low although it still moves beyond 1,700 percent annually, according to OVF. In August, monthly inflation was slightly lower at 10.6%, and has remained below the 50% threshold over the past six months.
“Venezuela’s surprise toy has amputated its legs due to the rising tide of violence in the country,” Hanke said.
The government is blaming Penalties in the US on the economic crisis in Venezuela, although the economy began to deteriorate before Washington established its first phase.
In launching the restructuring fund, the Maduro government said it was the victims of the economic crisis. [and] our national currency “through” the use of lawsuits on the economic and social fabric “.
“We are all subject to the consequences,” said Fernando Alvarado, 71, a retired civil servant and state aide. “It’s people who suffer”.
The government says digital bolívar “will help grow and stabilize digital assets in Venezuela” and has promised to create digital currency, saying “physical and digital bolívar will coexist”.
But this seems unlikely in a world where power cuts are frequent and mobile phones are becoming increasingly difficult. “No strings attached. It is shallow, unstable and not widespread, “said Tamara Herrera, director of local consultancy Síntesis Financiera.
In 2018, during the celebrations, the government launched a so-called oil subsidy scheme petro, which has sunk deep.
“No one ever paid us petros,” said Andrade, a fruit and veg seller.
While the introduction of new banks should bring benefits to consumers and sellers in the markets and possibly attract others to the use of the national currency, it has also caused confusion.
One salesman, who asked how many zeros are being paid this week, replied: “five”. When asked how much a sack of flour would cost, he said: “One bolívar, I think. No, five!”