The Central Bank of Venezuela announced the new redenomination plan for its fiat currency called “Digital Bolivar.” This new proposal seeks to simplify transactions by slashing six zeroes from the current value of the currency. While it is called digital, it has nothing to do with the proposal of a new central bank digital currency (CBDC), but it claims to have the development of a digital economy in the country as its objective.
Digital Bolivar Redenomination Plan Announced
The Central Bank of Venezuela issued an official statement yesterday on the implementation of a new redenomination plan for its fiat currency after the measure was leaked by some sources last month.
The plan, called by the authorities “Digital Bolivar,” contemplates slashing six zeroes from the current value of the fiat currency to ease the process of making payments and transactions. At the time of writing, there is an exchange rate of 4,000 VES per dollar, which results in uncomfortably large amounts when making transactions or payments in fiat currency.
The Central Bank of Venezuela states the change will bring positive improvements to the fiat currency, paving the way for a recovery of the national economy that, according to the bank, has been wracked by a series of economic attacks and a financial blockage, referring to the economic sanctions that the government of the U.S has exerted over the country.
While the redenomination plan is called the “Digital Bolivar,” no central bank digital currency has been proposed in the issued statement. The name is derived from the objective of the measure, which is to “reduce transaction costs in the economy” and “advance in the construction of a modern vision of the currency in everyday transactions.”
Third Redenomination Plan for Venezuela
This is the third redenomination plan that the Venezuelan government has executed in less than 15 years, a testament to the humongous inflation the country has faced during this period. The first redenomination plan, which changed the name of the currency by adding the “strong” prefix to its name, happened in 2008 when three zeroes were slashed from the currency.
However, inflation and devaluation continued, and authorities had to coordinate a new redenomination plan that slashed five zeroes from the currency in 2018. These conditions have made Venezuela a fertile ground for alternative currencies and payment systems, due to the dramatic collapse of the fiat, which has made traditional saving methods almost useless.
The adoption of this plan also contemplates the printing of new bills according to the new value of the currency. The implementation of this plan is slated to happen on October 1, when all financial institutions and payment processors will have to adapt their systems to support it.
What do you think about the new “Digital Bolivar” redenomination plan? Tell us in the comments section below.
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The Central Financial institution of Venezuela introduced the brand new redenomination plan for its fiat foreign money known as “Digital Bolivar.” This new proposal seeks to simplify transactions by slashing six zeroes from the present worth of the foreign money. Whereas it’s known as digital, it has nothing to do with the proposal of a brand new central financial institution digital foreign money (CBDC), nevertheless it claims to have the event of a digital economic system within the nation as its goal.
Digital Bolivar Redenomination Plan Introduced
The Central Financial institution of Venezuela issued an official assertion yesterday on the implementation of a brand new redenomination plan for its fiat foreign money after the measure was leaked by some sources final month.
The plan, known as by the authorities “Digital Bolivar,” contemplates slashing six zeroes from the present worth of the fiat foreign money to ease the method of creating funds and transactions. On the time of writing, there’s an trade charge of 4,000 VES per greenback, which leads to uncomfortably giant quantities when making transactions or funds in fiat foreign money.
The Central Financial institution of Venezuela states the change will carry constructive enhancements to the fiat foreign money, paving the way in which for a restoration of the nationwide economic system that, in keeping with the financial institution, has been wracked by a collection of financial assaults and a monetary blockage, referring to the financial sanctions that the federal government of the U.S has exerted over the nation.
Whereas the redenomination plan known as the “Digital Bolivar,” no central financial institution digital foreign money has been proposed within the issued assertion. The identify is derived from the target of the measure, which is to “cut back transaction prices within the economic system” and “advance within the building of a contemporary imaginative and prescient of the foreign money in on a regular basis transactions.”
Third Redenomination Plan for Venezuela
That is the third redenomination plan that the Venezuelan authorities has executed in lower than 15 years, a testomony to the humongous inflation the nation has confronted throughout this era. The primary redenomination plan, which modified the identify of the foreign money by including the “sturdy” prefix to its identify, occurred in 2008 when three zeroes had been slashed from the foreign money.
Nonetheless, inflation and devaluation continued, and authorities needed to coordinate a brand new redenomination plan that slashed 5 zeroes from the foreign money in 2018. These circumstances have made Venezuela a fertile floor for various currencies and fee techniques, as a result of dramatic collapse of the fiat, which has made conventional saving strategies nearly ineffective.
The adoption of this plan additionally contemplates the printing of recent payments in keeping with the brand new worth of the foreign money. The implementation of this plan is slated to occur on October 1, when all monetary establishments and fee processors must adapt their techniques to help it.
What do you consider the brand new “Digital Bolivar” redenomination plan? Inform us within the feedback part beneath.
Picture Credit: Shutterstock, Pixabay, Wiki Commons
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