Venezuela is all set to redenominate its national currency and launch its central bank digital currency (CBDC), a digital bolivar, which will be put into circulation from October 1. The South American country is hit with hyperinflation and is going through political turmoil. The Central Bank of Venezuela announced that it would adjust six zero’s to its hyper-inflated fiat. It will launch a one bolivar coin, along with banknotes denominated between 5 Bs to 100 Bs.
Venezuela is suffering from hyperinflation for years now.
The latest move comes when Venezuela is suffering from hyperinflation for years now. The country’s inflation peaked in 2018 with a rise of 1.8 million percent, while in the consecutive two years, it saw inflation of 9,500 percent and 3,000 percent, respectively. The latest redenomination of fiat currencies would be the third in the country’s recent history. Venezuelan Late President Hugo Chavez first changed the currency value at 1000-to-one, while his successor Nicolas Maduro made a 100,000-to-one in 2018, right at the peak of the hyperinflation.
Most of the local Venezuelan economy now runs on US dollars.
The country’s national currency is so battered that most of the local economy of Venezuela now runs on US dollars, despite the US sanctions in place. He even claimed that the country’s economy was already 77 percent digitized by the end of 2020. The upcoming digital bolivar will use an SMS-based exchange system for transfers and transactions between the users. Furthermore, the central bank also highlighted that the digital version of the national currency would not affect the bolivar’s value in any way. Venezuela launched Petro in 2018, a digital currency backed by the country’s rich oil reserves, in an attempt to circumvent the US sanctions.