Venezuela to launch digital bolivar in October

The Central Bank of Venezuela said it would put the digital bolivar into circulation on 1 October 2021.

OFFICIAL COMMUNICATION🔵| From 1 October the Digital Bolivar comes into effect
#BCV🇻🇪 https://t.co/635uhVu1sA pic.twitter.com/aErAOUvwHL

— Banco Central de Venezuela (@BCV_ORG_VE) August 5, 2021

Coinciding with the launch of the CBDC in the country, a denomination will take place, during which the nominal value of the national currency will lose six zeros.

According to the Bloomberg Cafe Con Leche, which tracks hyperinflation in the country by the price of a cup of coffee in a Caracas establishment, the price of the product now stands at 7,662,898 bolivars ($1.9). Over the year it has risen by 2,542% in the national currency.

The previous denomination in Venezuela occurred in 2018, removing five zeros from the bolivar’s nominal value. Authorities said at the time that the new monetary unit would be pegged to the oil-backed cryptocurrency El Petro, launched in February of that year.

President Nicolas Maduro stressed that the national cryptocurrency is intended to strengthen the economy, which has been ravaged by crisis and US sanctions.

A number of Venezuelan enterprises were required to transact in El Petro. Later Maduro said that a new system of wages and prices, tied to the national digital currency, would operate in the country.

The national cryptocurrency has little uptake among the public. Retailers refuse to accept it as payment.

In May 2021 Maduro ordered to make social payments in El Petro as a measure to shield benefits from hyperinflation.

The launch of the digital bolivar is intended to help the country escape the hyperinflation cycle.

The regulator also said that it is working on “a new system for exchanging financial messages, free and sovereign, created in Venezuela and by Venezuelans, promoting independence of national banking operations from foreign platforms.”

Against the backdrop of the crisis in Venezuela Bitcoin’s popularity is growing, and merchants are not only starting to accept digital gold, but even offer discounts for such payments.

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