The South American country is preparing to launch its CBDC in the coming months.
Under Bloomberg, Venezuela confirmed that it would launch a digital currency version of its bolivar in October. The move comes just months after El Salvador announced it was adopting Bitcoin as legal tender. Venezuela, led by President Nicolas Maduro, has been through difficult economic times over the past four years. It experienced rampant inflation, a situation that led to the implementation of several policies.
Bloomberg reports that the country will remove six zeros from the bolivar to save the currency “ who has been ravaged by years of hyperinflation ». At one point, the government was forced to adopt the US dollar in an attempt to stifle the problem. The announcement of the launch of a CBDC follows that of the redenomination of the currency.
The Central Bank of Venezuela will oversee an SMS exchange system that will facilitate the adoption of the digital currency dubbed “Bolivar Digital“. The new notes, according to the Bloomberg article, will be printed by the central bank and put into circulation from the first day of October. It should be noted that Venezuelans still use the bolivar for simple transactions, although most of them have a preference for the dollar.
The bank urged Venezuelans to be receptive to digital currency and use it to make daily transactions. The country hopes to solve the inflation problem by introducing the CBDC and removing the six zeros from its currency.
However, not all perceive this decision as positive. Some believe that removing zeros is only a short-term solution. Their argument is not exaggerated, given that the country has already adopted similar changes not so long ago. The bank responded to doubts about the impact of the changes by explaining that the decisions would not affect the value of the bolivar.
« The bolivar will be worth neither more nor less, in order to facilitate its use, it moves to a simpler monetary scale “, said the bank.
The idea of a digital currency first surfaced in February, when President Maduro touted it as a potential way to improve the country’s economy. This was not the first time that the president was interested in digital currencies. He had already created the Petro coin, a digital currency that would be linked to Venezuela’s oil reserves, to evade US sanctions. Last year, Maduro also suggested the adoption of cryptocurrencies to circumvent sanctions.