President Nicolas Maduro of Venezuelan

Hyperinflation drives Venezuela to print large Bolivar notes to save economy

*As Venezuela’s economy shrank for a seventh straight year in 2020, its Central Bank has disclosed it is set to issue three new large denomination notes for circulation from March 8, to ‘fulfill the current economy’s requirements’

Isola Moses | ConsumerConnect

As hyperinflation renders most currency denominations worthless, forcing citizens to turn to the US Dollar for everyday transactions in the country, Venezuela has said it will introduce new large-denomination Bolivar notes to “fulfill the current economy’s requirements.”

A statement on the country’s Central Bank Web site Friday, March 5 said Venezuela would begin circulating the new 200,000, 500,000 and 1,000,000 bills to “fulfill the current economy’s requirements” without providing further details.

The 1,000,000 note, the largest in the nation’s history, is however, worth only $0.53 Cents.

Venezuela’s Bolivar denominations

As Venezuela’s economy shrank for a seventh straight year in 2020, the government turned a blind eye to a growing number of Dollar transactions, kick-started by rolling power outages that prevented credit and debit card purchases and fostered the use of cash.

About 66 percent of transactions across the country are estimated to be made in foreign currency, according to Ecoanalitica.

Whereas the Dollar has gained ground, Venezuelans continue to rely on Bolivar bills for public transportation and to purchase subsidised fuel in the country.

The Caracas subway recently issued an electronic payment system after it routinely stopped charging passengers due to cash shortages.

President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation that have prompted the country’s mint to issue higher-denomination notes that are quickly rendered all but useless.

Inflation soared 3,000% in the last 12 months, according to Bloomberg News’s Cafe con Leche Index.

In October 2020, Venezuela imported banknote paper with plans to issue a 100,000 bill that quickly became outdated at the time.

Report says the country last issued new bills in 2019, after chopping five zeros of the previous bills in circulation in 2018.

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