Venezuela’s wrecked economy continues to be suffocated between gigantic inflation and a subsequent shortage of liquidity. And so the government of Nicolás Maduro has decided to issue new denominations of paper money: three different notes of 200,000, 500,000 and 1 million Bolivars.
This will be the first time for such high cuts. The coins, as communicated by the Venezuelan Central Bank, will be identical in design but differentiated only by color and denomination. THEn this dramatic battle against hyperinflation in August 2018 the country, once one of the richest in the world, had carried out a currency conversion by removing five zeros from the Bolivar.
At that time, the highest denomination banknote in circulation was the sovereign 500 Bolivar, equivalent to about eight euros.
Now, the new one million Bolivar note is worth just 50 cents, a value that, in the United States, is practically nonexistent.
The inflationary monster has been eating the Venezuelan economy since 2017 in such a voracious way that the three new banknotes are not enough to buy a kilo of cornmeal. The nuavi emission is just a palliative that seeks to remedy the lack of change necessary for basic operations such as traveling by public transport. But this operation remains only a temporary buffer to postpone another conversion that would automatically lead to a new devaluation.
The Venezuelan business newspaper is, two years after the last conversion, increasingly complicated due to the impossible amounts of money to manage and read.
The cash registers of companies do not have the ability to process so many zeros, so it has become common to pay a market for a few products in multiple transactions as the expense can exceed 100 million Bolivars.
Having cash to pay for the bus trip from home to work means that most people go to the bank for two days, due to restrictions on the delivery of paper money.
In fact, banks can give up to a maximum of 400,000 Bolivars per day while most ATMs are out of order.
The physical shortage of money and paper does not stop due to the amount of money that the Maduro government continues to inject into the economy without hedging to stem public spending and the payment of bonuses to public workers and retirees. A sort of “citizenship income” that partly compensates for the minimum wage, which is less than a dollar a month.
In just seven years, the decline in oil production, strong international sanctions and the irresponsible management of the leader have put the entire economy of the country on the pavement.
Immune to this disaster, the dictator continues to tell Venezuelans a film that is different from reality. In this case he had announced that he wanted to implement a digital economy in response to Bolivar’s hyperinflation. “We will move towards opening accounts that will allow us to regularize, strengthen and reinvigorate our currency”.
But by now practically everyone has understood that Chavismo and its highest expression Nicolas Maduro are the causes of the destruction of the country controlled only by military forces paid for by the government.