August 7, 2021 11:15 UTC
August 7, 2021 11:15 UTC
The Central Bank of Venezuela announced a new re-denomination arrangement for its legal tender called the “digital bolivar”. This new proposal aims to change the transaction through the dynamic six zeros of the currency’s current price. Although it is called digitization, it has nothing to do with the proposal of a new central bank digital currency (CBDC), but it claims to target domestic digital economic events.
Announcement of digital bolivar renaming plan
The Central Bank of Venezuela issued a political statement yesterday regarding the implementation of alternative re-denomination arrangements for its renamed currency following leaks from some sources last month.
Known by the authorities as the “digital bolivar”, the plan considers the dynamic adjustment of six zeros from the current price of the current currency to simplify the method of creating payments and transactions. At the time of writing, every unit is exchanged for 4,000 VES per U.S. dollar. Once a transaction or payment is made in fiat currency, it will eventually generate disturbingly huge transactions.
The Central Bank of Venezuela stated that this modification can bring positive improvements to the new currency, pave the way for the recovery of the financial system that has suffered a series of economic attacks and currency blockades in parallel with the bank, and touches the economic sanctions imposed by the US government on the country. .
Although the idea of renaming is called “digital bolivar”, the central bank digital currency is not planned in the issued statement. The name stems from the goals of the scene, namely “reducing transaction prices in the economy” and “building a modern currency vision in daily transactions”.
Venezuela’s third name change plan
This is the third renaming plan implemented by the Venezuelan government in fifteen years, a testament to the inflation that the country has faced throughout the era. The main re-denomination plan to modify the currency name by adding a “strong” prefix to its name occurred in 2008, when the 3 zeros in the currency were cut.
However, inflation and devaluation continued, and the authorities had to coordinate a replacement plan that cut 5 zeros from the currency in 2018. Due to the rapid collapse of rescript, these conditions created fertile ground for different currencies and payment systems in Venezuela, which made the ancient saving methods almost useless.
The adoption of the plan also takes into account the printing of the most recent bills based on the new price of the currency. The plan is scheduled to be implemented on October 1, when all currency institutions and payment processors can adjust their systems to support it.