Demonetisation of biggest currency in Venezuela, Inspired by India?
In a brazen announcement, Venezuela on Sunday said that it will withdraw its biggest bolivar currency notes from circulation on Wednesday, giving citizens 10 days to exchange the 100-bolivar bills with the central bank.
According to a Reuters report, President Nicolas Maduro introduced the emergency move to “beat the mafias” and stop them from smuggling 100 bolivar notes across the border with Colombia, as the country struggles to tackle an economic crisis. “They will be stuck with worthless paper,” he said.
However, in another report it has been said that this is part of the Venezuela government’s attempts to fix the country’s worsening economy. The 100 bolivar note is officially worth 15 US cents but are fetching only 2 US cents in the black market, CNN Money reported.
It has been further reported according to data from Venezuela’s central bank, 100-bolivar bills made up 48 per centof all bills and coins in circulation in in November.
Venezuela government introduces six new bills of 500 bolivar to 20,000 bolivar denominations which are expected to hit the market on Thursday. This was also part of the government’s desperate efforts to restore the economy.
It is to be noted that the crisis in the country has stooped to a point where to make simple purchases without credit or debit cards, citizens are required to carry bags full of cash with them. The cash crunch, too, has worsened in the last few months, according to Reuters.
Criticising the move, opposition leader Henrique Capriles said, “Who would think of doing something like this in December and with all the problems we are having?”
Other critics said the 10-day window was too short to exchange the notes. According to the International Monetary Fund, inflation in the South American country could soar to 500 per cent by the end of the year and to 1,660 per cent in 2017.
This comes amid ongoing cash crunch in India, after Indian Prime Minister Narendra Modi demonetised high-denomination notes of Rs 500 and Rs 1000 on November 8. The Centre had reasoned that this step was aimed at curbing the circulation of black money, cutting of terror funding and weeding out corruption.
However, note ban has left citizens grappling with a cash crunch, with the Centre insisting that there was enough money in circulation and consistently promoting the use the digital transactions.