Stripped of six zeros, the Venezuelan currency is now called”digital” bolivar

RIO DE JANEIRO, BRAZIL –  The Venezuelan government will remove six zeros from the bolivar, the local currency hit by runaway inflation, and introduce a new currency cone, the central bank announced Thursday (5).

“From October 1, 2021, the digital bolivar will come into effect, applying a currency scale that eliminates six (6) zeros in the national currency. In other words, all monetary amounts and everything expressed in national currency will be divided by one million (1,000,000),” the bank said in a statement.

Read also: Check out our coverage on Venezuela

The bolivar, officially born as “sovereign”, was already before this measure missing eight zeros since it has already undergone two monetary reconversions – those that made it go from the original to the “strong” and the current “sovereign.”

HYPERINFLATION

The decision, the third currency conversion in 13 years, is intended to “facilitate” the use of the bolivar, which, according to BVC data, registered cumulative inflation of 264.8 percent between January and May.

A new currency cone with five new banknotes of 5, 10, 20, 20, 50, and 100 bolivars, as well as a 1-bolivar coin, will go into effect that day, Communications and Information Minister Freddy Ñáñez announced on Twitter.

The measure was expected by experts amid an inflation spiral that ends with cumulative inflation of 2,959.8 percent in 2020 and 9,585.5 percent in 2019, according to BCV data. It is common for people to speak of “thousands” instead of “millions” when buying goods on the street.

US DOLLAR REPLACES THE BOLIVAR

In Venezuela, cash in bolivars is scarce, and long lines often form outside banks. The bolivar has been replaced by the dollar, which has become the country’s de facto currency. It is becoming more common for retail prices to be quoted in dollars and payments made in foreign currency.

In August 2018, the current currency taper went into effect after President Nicolás Maduro announced the deletion of five zeros from the bolivar the month before to “facilitate transactions.” This currency was last expanded in March of last year.

REGIME FAILURE

Several Venezuelan opponents considered that the monetary reconversion announced this Thursday by the Government of Nicolás Maduro, which will remove six zeros from the current sovereign bolivar, is a sign of the “failure” of the Executive’s economic policy.

“Our currency is worth less and less. The crisis deepens, and Venezuelans are poorer”, wrote on Twitter the two-time presidential candidate Henrique Capriles, who recalled that they have already made two reconversions, in 2007 and 2018, in which they eliminated another eight zeros to the bolivar.

Therefore, the opponent assured that “14 zeros less are not a recovery”, but “the sign of the economic destruction of the regime”.

“The dictatorship announces a new monetary reconversion. There are already 14 zeros that have been erased from the currency in 13 years, an unequivocal symptom of the failure of an economic policy”, wrote Julio Borges, appointed by Juan Guaidó as commissioner for Foreign Relations.

In his opinion, “hyperinflation will continue galloping and, in a few months, this new reconversion will end up like the others, in failure”.