Today, Venezuela has changed its currency, the bolivar, by removing six zeros. Due to the high inflation in the country, the currency was practically worthless.
Until yesterday, the highest valued banknote was one million bolivars, equivalent to 0.00000000000205560 euros. For example, a 2-liter bottle of soft drink costs more than 8 million bolivars. In addition, such notes were rare, which meant that Venezuelans often had to deal with a thick bundle of banknotes.
The most valuable currency introduced today is 100 bolivars, about 20 euros converted. However, there is a good chance that the value of the new currency will also depreciate rapidly due to inflation.
I only had 3 million bolivars in my account, you don’t even buy a piece of bread with that
endless strings of zeros
The modification should make it easier to pay in cash. Additionally, the goal is to simplify things like accounting, as this now includes working with an endless string of zeros.
“The main and most fundamental reason is that the payment systems have already broken, because the number of numbers makes it impossible to work with the systems,” said Jose Guerra, professor of economics at the Central University of Venezuela. “Debit card processing systems or corporate accounting systems are not intended for hyperinflation, but for the normal economy.”
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Dollars to PayPal
Venezuelans were allowed to withdraw a maximum of 20 million bolivars per day. Sometimes the amount was less if the bank did not have enough banknotes in stock. To facilitate payment, US dollars or online payment methods such as PayPal and Zelle have been used.
The Central Bank of Venezuela confirmed that eliminating six zeros will not affect the value of the currency. The value of the bolivar will not be more or less. It is intended to facilitate its use on a monetary scale only.”
This is the third time that Venezuela’s socialist leaders have removed zeros from the national currency. In 2008, the Bolivar lost under President Hugo Chavez three times. Incumbent President Nicolas Maduro made sure that five more zeros disappeared in 2018.
Venezuelans are a little hopeful that the new banknotes will offer a solution after four years of high inflation. The central bank no longer publishes inflation statistics, but the International Monetary Fund estimates that the interest rate in Venezuela will be 5,500% by the end of this year.
“I only had 3 million bolivars in my account, and that doesn’t even buy a piece of bread,” said Elena Diaz, a 28-year-old cleaning lady. If they remove six zeros, I have 3 bolivars left. I might not buy anything with that.”
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