First modification: 08/05/2021 – 18:39
The Central Bank of Venezuela announced that the national currency will be divided by one million from October 1 and presented the new monetary project of the digital bolivar. It is the third monetary reconversion in less than fifteen years to face the rampant inflation that affects the Venezuelan economy.
With six zeros less. This will be the new bolivars of Venezuela from next October 1, according to announced this Thursday, August 5, the Central Bank (BCV) in a statement. This new monetary reconversion will give way to the digital bolivar.
“As of October 1, 2021, the digital bolivar will come into effect, by applying a monetary scale that removes six zeros to the national currency. That is, all monetary amounts and everything expressed in national currency will be divided by one million (1,000 .000) “, reported the BCV.
This change in scale not only seeks to face the unstoppable inflation that has affected Venezuela for years, but also tries to take a step towards the digitization of transactions.
“It constitutes a necessary historical milestone at a time when the country begins the road to economic recovery,” the institution emphasizes.
However, it also involves a conversion of physical bolivars. As of October 1, there will be a one bolivar coin and five bills of 5, 10, 20, 50 and 100 bolivars. Differentiated by color, they all show the face of the liberator Simón Bolívar.
The digital bolivar, a step towards a “modern” economy
The digital format of this new bolivar, which will have the same value as the physical currency, seeks to “advance in the construction of a modern vision” of the economy and “facilitate the connection” of Venezuelans with their currency, according to the Central Bank.
Currently, the paper bolivar is hardly used in Venezuela due to its devaluation. The dollar is the currency that is widely used for cash transactions.
Payments in bolivars are made by card or with transfers through a platform called Mobile Payment, which, however, is not always accessible due to the poor connectivity that affects some areas of Venezuela and that sometimes makes this type of transaction impossible.
Three currency reconversions in less than 15 years
This currency conversion is the third to be announced in the last 13 years. In 2007, Venezuela removed three zeros from its bolivar to make way for the bolivar fuerte. In 2018 the process was repeated to switch to using the sovereign bolivar, which eliminated five zeros from the previous use.
In March of this year, the BCV issued new banknotes to represent the high values that were handled, with figures of 200,000 bolívares, 500,000 bolívares and one million bolívares.
Currently, one million bolivars is approximately $ 0.25, something that makes the daily economy very difficult to function.
The inflationary spiral led Venezuela to end 2020 with 2,959.8% accumulated inflation. That same data in 2019 was 9,585.5%.
The BCV statement details that “the reference exchange rate will continue to be the one determined by the Venezuelan exchange market system.”
With EFE and local media