Venezuela to launch CBDC in October — and cut six zeros from its currency

graphical modern digital world news background 1 1 scaled

The Central Bank of Venezuela is rolling out a CBDC in October and will launch an SMS-based exchange system to facilitate its use.

The Central Bank of Venezuela will launch a CBDC in October alongside a monetary redenomination that will cut six zeros from the currency due to raging inflation.

As of Oct. 1, the digital bolivar will begin circulation in the economy. Its cash equivalent will get a new 1-bolivar coin, along with banknotes ranging from 5 Bs. to 100 Bs. as part of the six zero readjustment of the currency,

The Central Bank of Venezuela made the announcement on Aug. 6.  The CBDC will be accompanied by an SMS-based exchange system to facilitate payments and transfers between its users. The bank claimed that the CBDC and redenomination of the currency will have no effect on the bolivar’s value and that the overhaul is part of a move to simplify the use of the currency.

“The bolivar will not be worth any more or any less, in order to facilitate its use, it is being taken to a simpler monetary scale,” the central bank said.

Venezuela’s President Nicolas Maduro first teased the idea of a digital bolivar back in February, as he outlined the issuance of CBDC as one of the actions the government was taking to modernize and rebuild the economy.

The president is no stranger to state-issued digital currencies, having launched the oil-pegged Petro coin in 2018 as a tool to circumvent U.S. sanctions.

This the second time in three years that Venezuela has readjusted the bolivar after Maduro cut five zeros from the currency in 2018 as inflation hit its peak of 1.8 million percent. In 2020, the annual inflation rate was estimated to be around 2,300%.

Related: Fed governor says CBDCs remain ‘a solution in search of a problem’

Luis Vicente Leon, economist and president of Caracas-based Datanalisis, criticized the move, telling Bloomberg on Aug. 5 that another redenomination of the currency will do nothing to address the underlying issues that are debasing its value:

“Removing those zeros does not solve, at all, the reason that originated the problem. Without resolving the root of the issue, we will have the same problem in months.”

Venezuela has been dealing with a long-running economic crisis as the economy suffers from U.S. sanctions and hyperinflation. In September 2020, Maduro proposed an anti-sanctions bill that sought to use crypto as a tool to evade the sanctions imposed on the country.

Ronnie Huss

Ronnie Huss

Leave a Reply

Your email address will not be published. Required fields are marked *

Share:

Share on telegram
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Related Posts

bitcoin
Bitcoin (BTC) $ 62,910.86
ethereum
Ethereum (ETH) $ 3,063.00
tether
Tether (USDT) $ 1.00
bnb
BNB (BNB) $ 546.94
solana
Solana (SOL) $ 134.57
usd-coin
USDC (USDC) $ 1.00
staked-ether
Lido Staked Ether (STETH) $ 3,056.71
xrp
XRP (XRP) $ 0.490352
dogecoin
Dogecoin (DOGE) $ 0.154567
the-open-network
Toncoin (TON) $ 6.34
cardano
Cardano (ADA) $ 0.459582
avalanche-2
Avalanche (AVAX) $ 34.84
shiba-inu
Shiba Inu (SHIB) $ 0.000021
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 62,890.85
tron
TRON (TRX) $ 0.110932
bitcoin-cash
Bitcoin Cash (BCH) $ 483.38
polkadot
Polkadot (DOT) $ 6.63
chainlink
Chainlink (LINK) $ 13.39
matic-network
Polygon (MATIC) $ 0.699889
litecoin
Litecoin (LTC) $ 77.53
internet-computer
Internet Computer (ICP) $ 12.20
leo-token
LEO Token (LEO) $ 5.86
near
NEAR Protocol (NEAR) $ 5.09
uniswap
Uniswap (UNI) $ 7.10
dai
Dai (DAI) $ 0.999706
first-digital-usd
First Digital USD (FDUSD) $ 1.00
ethereum-classic
Ethereum Classic (ETC) $ 26.17
aptos
Aptos (APT) $ 8.84
mantle
Mantle (MNT) $ 1.13
blockstack
Stacks (STX) $ 2.49
okb
OKB (OKB) $ 58.44
bittensor
Bittensor (TAO) $ 511.50
crypto-com-chain
Cronos (CRO) $ 0.126017
filecoin
Filecoin (FIL) $ 5.96
render-token
Render (RNDR) $ 8.31
cosmos
Cosmos Hub (ATOM) $ 8.05
stellar
Stellar (XLM) $ 0.106866
arbitrum
Arbitrum (ARB) $ 1.13
vechain
VeChain (VET) $ 0.039826
maker
Maker (MKR) $ 3,077.72
hedera-hashgraph
Hedera (HBAR) $ 0.078823
immutable-x
Immutable (IMX) $ 1.93
kaspa
Kaspa (KAS) $ 0.118491
dogwifcoin
dogwifhat (WIF) $ 2.60
the-graph
The Graph (GRT) $ 0.252181
ethena-usde
Ethena USDe (USDE) $ 1.00
optimism
Optimism (OP) $ 2.19
wrapped-eeth
Wrapped eETH (WEETH) $ 3,171.63
injective-protocol
Injective (INJ) $ 24.36
monero
Monero (XMR) $ 120.65