Demonetisation abroad: Venezuela to end circulation of 100-bolivar bills
The notes, currently the country’s biggest currency, accounts for 48% of all bills and coins in circulation in the market in November.
Venezuela on Sunday announced that it will withdraw its biggest bolivar currency notes from circulation on Wednesday, giving citizens 10 days to exchange the 100-bolivar bills with the central bank, Reuters reported. President Nicolas Maduro introduced the emergency move to “beat the mafias” and stop them from smuggling 100 bolivar notes across the border with Colombia, as the country struggles to tackle an economic crisis. “They will be stuck with worthless paper,” he said.
This is part of the Venezuela government’s attempts to fix the country’s worsening economy. The 100 bolivar note is officially worth 15 US cents but are fetching only 2 US cents in the black market, CNN Money reported. According to data from Venezuela’s central bank, 100-bolivar bills made up 48% of all bills and coins in circulation in in November.
The six new bills of 500 bolivar to 20,000 bolivar denominations, which were introduced by the government last week, are expected to hit the market on Thursday. This was also part of the government’s desperate efforts to restore the economy. The crisis in the country has reached a point that to make simple purchases without credit or debit cards, citizens are required to carry bags full of cash with them. The cash crunch, too, has worsened in the last few months, according to Reuters.
The move did not come without criticism. “Who would think of doing something like this in December and with all the problems we are having?” Opposition leader Henrique Capriles said. Other critics said the 10-day window was too short to exchange the notes. According to the International Monetary Fund, inflation in the South American country could soar to 500% by the end of the year and to 1,660% in 2017.
The news comes a little over a month after the high-denomination notes of Rs 500 and Rs 1,000 were made illegal tender in India. Prime Minister Narendra Modi announced the decision on November 8, saying it was aimed at curbing the circulation of black money, cutting of terror funding and weeding out corruption. The currency ban, however, has left citizens grappling with a cash crunch, with the Centre insisting that there was enough money in circulation and consistently promoting the use the digital transactions.