The Central Bank of Venezuela has announced a new monetary reconversion as of October 1 by which six zeros will be eliminated from the Venezuelan bolivar, so that each value of the currency will be divided by one million, as reported in a statement this Thursday.
The change in monetary scale, explains the institution, is based on the deepening and development of the digital economy in Venezuela, since, in addition to the new reconversion, the Central Bank has announced, also as of October 1, the entry into vigor of the digital bolivar.
A skyrocketing inflation
This is the first currency conversion . In 2007 the country decided to eliminate three zeros from the currency, and in 2018 it repeated the operation, although that time eight zeros were eliminated from the bolivar.
At present, Venezuela is the country that holds the ‘record’ for the highest inflation in the world. According to data from the Central Bank of Venezuela, in 2020 it reached a level of 2,959.8%, and according to IMF estimates, this year it will close at a level of 5,500%.
According to the issuing institute, the new conversion and the introduction of the digital bolivar “constitutes a necessary historical milestone at a time when the country begins the path of economic recovery”, after a crisis caused by the “brutal attack” on the economy and the Venezuelan currency, as well as “the criminal application of an economic and financial blockade.”
The agency has clarified that the introduction of the digital bolivar will not affect the value of the currency, so that the local currency “will not be worth more or less”, it will only be used to facilitate its use on a simpler monetary scale.
Likewise, the Central Bank has indicated that in order to maintain the inclusion of all Venezuelans, the agency will continue to attend to the issuance of the bolivar in its physical expression. “The physical bolivar and the digital bolivar will coexist in a process aimed at rescuing their strength and their benchmark as an expression of our economy,” he added.
On the other hand, the issuing institute has indicated that, in addition to the announced actions, Venezuela is in a progressive process of modernizing its payment systems. The new financial messaging exchange system recently began operations, with a focus on promoting the independence of foreign systems for banking operations in the Latin American country.