(1 Oct 2021) A new currency with six fewer zeros debuted Friday in Venezuela, whose currency has been made nearly worthless by years of the world's worst inflation.
The highest denomination until now was a 1 million bolivar bill that was worth a little less than a quarter (25 US cents) as of Thursday.
The new currency tops out at 100 bolivars, a little less than 25 US dollars — until inflation starts to eat away at that as well.
The million-to-1 change for the bolivar is intended to ease both cash transactions and bookkeeping calculations in bolivars that now require juggling almost endless strings of zeros.
Under the old system, a two-liter bottle of soda pop could cost more than 8 million bolivars — and many of those bills were scarce, so a customer might have to pay with a thick wad of paper.
Banks allowed customers to withdraw a maximum of 20 million bolivars in cash per day, or sometimes less if the branch was running short.
So, consumers have come to rely on U.S. dollars and digital payment methods, such as Zelle and PayPal, to make purchases.
Nowadays, most transactions are made electronically, and experts said more than 60% are made in U.S. dollars.
This is the third time Venezuela's socialist leaders have lopped zeros off the currency.
The bolivar lost three zeros in 2008 under the late President Hugo Chávez, while his successor, current President Nicolás Maduro, eliminated five zeros in 2018.
After more than four years of hyperinflation, many Venezuelans think the new bills will be short-lived as well.
The central bank does not publish inflation statistics anymore, but the International Monetary Fund estimates that Venezuela's rate at the end of 2021 will be 5,500%.
The use of greenbacks accelerated after Maduro's government two years ago gave up its long and complicated efforts to restrict transactions in dollars in favor of the local currency — restrictions that only fed inflation.
Dollar bills flow into Venezuela through a network of foreign bank account holders who charge commissions or via people traveling home with cash.
Ahead of the change, some stores already had begun to display three prices for each product, in U.S. dollars as well as new and old bolivars.
Banks said they would freeze operations for several hours between Thursday and Friday to make adjustments for the change.
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