The Venezuelan government said it will knock five zeros off its currency — the bolívar — instead of the three it had planned. According to Financial Times, the decision is a move to keep up with hyperinflation, which the International Monetary Fund (IMF) predicts will hit 1,000,000 percent this year.
In a televised address, President Nicolás Maduro said the new bank notes would begin circulating on Aug. 20. However, experts say that the new bills won’t be worth much. At the current rate of inflation, which the country’s National Assembly (or congress) estimated at an annualized 46,305 percent in June, the highest denomination bill would be worth only $6 by the end of August. At the end of 2018, it would be worth 20 cents.
“Taking zeros off the currency doesn’t improve people’s salaries,” said Ángel Alvarado, an economist and opposition member of congress. “It also doesn’t stop price rises.”
It is estimated that there are around 20 billion bank notes in circulation in Venezuela, many of them worthless, which will be withdrawn from next month. Maduro said the new “sovereign bolívar” would be tied to the petro, a state-controlled cryptocurrency he launched this year that is supposedly backed by Venezuela’s huge oil reserves.
Back in February, Maduro claimed that the country sold $735 million of its “petro” cryptocurrency during Day One of its presale. Maduro did say “petro” could be used for tourism, gasoline or oil transactions, and he has been touting the cryptocurrency.
He said in an announcement on state television, “Today, a cryptocurrency is being born that can take on Superman.”
Francisco Rodríguez, an economist and expert on Venezuela at Torino Capital investment bank in New York, said, “Since there is no market for it, there is also no market price for the petro, so it is difficult to understand what anchoring to it would mean. The Venezuelan government retains the capacity to print petros. This makes anchoring the bolivar to the petro not that different from anchoring the bolivar to itself.”