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The Central Bank (BCV) reported this Friday that it will expand the monetary cone: Venezuela will have three new notes that do not add up to the equivalent of 1 dollar at the official rate, amid unstoppable inflation.
The 200,000, 500,000 and 1 million banknotes “will gradually begin to circulate as of March 8, 2021,” the issuing entity reported in a statement.
“These new bills complement and optimize the current monetary cone, to meet the requirements of the national economy,” he added.
Together they add up to 1.7 million bolivars, below the price of the dollar at the Central Bank of 1.88 million.
A kilogram of tomato, eight bread rolls, a 250 ml soda or a low-quality bar of soap can cost around 1 million bolivars in an economy marked by an inflation that closed 2020 at almost 3,000%, thus passing through the fourth year of hyperinflation.
“The problem in a hyperinflationary cycle is that the speed with which the Central Bank updates the monetary cone is much slower”, the economist Asdrúbal Oliveros explained to AFP.
“The Central Bank has just released a banknote that will be the highest denomination that does not reach 65 cents on the dollar and let’s say that even with these new banknotes you are not really able to optimize the payment system,” he observes.
Cash in bolivars is also very scarce and users make long lines at banks to access no more than 400,000 bolivars, the limit at the box office.
The bolivar ended up being replaced by the dollar, which has become the de facto currency in Venezuela.
It is common for prices in any trade to be reflected in dollars and payments are made in foreign currency. Paying in local currency is normally done by debit card or bank transfer.
Venezuelan President Nicolás Maduro has promoted the “total digitization” of payments in Venezuela, including public transport, currently the only sector where the bolivar in cash prevails.
“For that they need to have an optimized technological and logistical system with the transport that they do not have, and that is why they take out these tickets to try to alleviate the problem a little”Oliveros indicated.
The monetary cone was last widened in June 2019.
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