Rather than fix their 2,500%+ inflation rate, Venezuela is simply dropping six zeros from their currency, the Bolivar.
(Bloomberg) — Venezuela will remove six zeros from the bolivar in another attempt to save a currency that has been wracked by one of the longest episodes of hyperinflation in history.
The central bank said it plans to print new bills that will go into circulation Oct. 1, while encouraging Venezuelans to use a digital version of the currency to simplify daily transactions. The currency will be branded the “Bolivar Digital,” the bank said in a statement posted on Twitter.
President Nicolas Maduro’s government has vowed to protect the use of the bolivar even as it has allowed widespread adoption of the U.S. dollar, a move that has helped ease shortages in stores. Bloomberg’s Cafe con Leche index, a measure of inflation, has registered a 2,575% rise over the past year. Although the dollar is preferred by most in the country, bolivars are still needed for everyday transactions, like for bus fares and to pay at gas stations that receive government subsidies.
The government has made similar adjustments to the bolivar before, having cut eight zeros since 2008, not including Thursday’s decision. Still, inflation and depreciation have eroded its purchasing power, forcing individuals and businesses to engage in complex operations to carry out simple transactions, as accounting and payment systems collapse from the overflow of digits.
While it will print physical money, including new bills of 5 to 100 bolivars, the central bank is attempting to move toward a digital economy with introduction of the digital bolivar, it said. The largest bill will be worth roughly $25 under the current official exchange rate.
At the same time, Federal Reserve Governor Christopher Waller said he is “highly skeptical” about the need for the U.S. central bank to develop a digital currency.
“While CBDCs continue to generate enormous interest in the United States and other countries, I remain skeptical that a Federal Reserve CBDC would solve any major problem confronting the U.S. payment system,” Waller said in the text of remarks prepared for delivery Thursday to the American Enterprise Institute.
Sure, Waller. The is nothing to worry about with the US Dollar. /sarc
Speaking of digital currencies, and FIAT currency (the US Dollar) …
Maybe Biden, Yellen and Powell should scrape those digis from the US Dollar, as Tom Haverford would say. That would be one way to defeat inflation. /sarc