The South American country is expected to launch its CBDC in the coming months
Venezuela has confirmed that it will launch a digital currency version of its bolivar in October, according to Bloomberg. The move comes just months after El Salvador announced it was adopting Bitcoin as legal tender. Venezuela, led by President Nicolas Maduro, has gone through difficult economic times over the past four years. It experienced significant galloping inflation, a situation which prompted the implementation of several policies.
Bloomberg reports that the country will drop six zeros from the bolivar to save the currency “which has been rocked by years of hyperinflationAt one point, the government was forced to adopt the US dollar in an attempt to cancel the issue. The announcement of the launch of a CBDC follows that of the currency redenomination.
The Central Bank of Venezuela will oversee an SMS-based trading system that will facilitate the adoption of the digital currency dubbed ‘Digital bolivar. ‘ The new banknotes, according to the Bloomberg story, will be printed by the central bank and enter into circulation from the first day of October. It should be noted that Venezuelans still use the bolivar for simple transactions, although most appreciate the dollar.
The bank urged Venezuelans to be receptive to digital currency and use it to conduct daily transactions. The country hopes to meet the challenge of inflation by introducing the CBDC and removing six zeros from its currency.
However, not everyone sees the decision as a positive one. Some believe that dropping the zeros is only a short-term solution. Their argument is not far-fetched, given that the country already passed similar changes not too long ago. The bank raised doubts about the impact of the changes, 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 is reduced to a simpler monetary scale, the bank said.
The idea of ââa digital currency first surfaced in February when President Maduro tip as a potential approach to improve the country’s economy. It was not the first time that the President has interacted with digital currencies. He had previously instituted the Petro coin, a digital currency believed to be linked to Venezuela’s oil reserves, to evade US sanctions. Last year, Maduro also suggested adopting cryptocurrency to circumvent sanctions.