Digital Bolivar To Be Launched in October by Venezuela
The Venezuelan government has announced plans to launch a new digital currency, the “petro”, later this year. The petro will be backed by Venezuelan oil reserves and is designed to circumvent international sanctions against the South American country.
The Venezuelan Bolivar, Venezuela’s main currency, has lost 80 per cent of its value against the US dollar since the beginning of 2015. With inflation at around 45 per cent, the people of Venezuela are looking for alternatives, and the government has just announced that an electronic currency will be launched in October.
The Venezuelan president Nicolas Maduro announced in a televised speech that the digital currency known as the “Bolivar” will be available to the public in October. It is not clear how many people will be able to use the currency or on what price they will be able to buy it, but Maduro said it will be linked to the U.S. dollar.
Venezuela will revamp its national currency, the Bolvar, in October. The central bank also intends to create a digital central bank (CBDC) — the digital bolivar – in addition to the reorganization. The Latin American nation known for its oil wealth is launching a new Bolvar Coin with bills ranging from 5 to 100 Bs. The digital bolivar will spread across the economy as well.
According to today’s bank announcement, the digital bolivar would utilize an SMS-based system to conduct payments and transfers between users.
The nation’s new 100 bolivar notes are equivalent to 100,000,000 current bolivars. The nation’s government has adapted to its currency for the third time in the past 12-13 years. Late President Hugo Chavez made 1000-to-one modifications in 2008, while Nicolas Maduro, his successor, made 1000-to-one improvements in 2018. This is a one-in-a-million correction.
Maduro’s economic modernisation program includes the CBDC. He said in February that the digital bolvar was part of his plan to completely digitize the country’s economy by the end of the year. He predicted that by 2020, 77 percent of Venezuela’s GDP will be digital.
He was also behind the Petro cryptocurrency, which Maduro claims was launched in 2018 and is backed by Venezuela’s enormous oil reserves. However, the experiment failed miserably. Despite his efforts to persuade locals, digital money was rejected.
Inflation is at an all-time high.
The reshaping is done in the face of hyperinflation. The central bank estimates that inflation will reach 3000 percent in 2020 and 9500 percent in 2019. The current level of inflation is so high that the everyday economy is now mainly conducted in dollars. Many stores have displayed prices in US dollars rather than bolivars.
This was also the aim of the Petro, which was created in February 2018 as the nation’s financial system.
The CBDC’s mechanics are less well known, despite the fact that it will circulate alongside the bolivar. Inflation is so high that there isn’t enough money to go around. The creation of a CBDC may offer further assistance for Venezuela’s cash output problems.
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