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President Nicolas Maduro’s announcement that all 100-bolivar notes were being called in by the government to combat the hoarding of currency shocked Venezuelans. The largest denomination of country’s crippled currency was pulled from circulation before it was replaced by the new, larger-denomination bills. It led to chaos and confusions. Frustrated people thronged banks and ATMs to deposit the bills.
The decision rendered people cashless in a country already mired in economic slump.
Formerly the highest denomination bill, the 100-bolivar note was worth about three US cents, and accounted for 77 percent of the cash in circulation in Venezuela.
100s is now useless, and smaller bills hard to find and practically worthless because of triple-digit inflation. Venezuelans are struggling to get the hard currency they need for daily transactions in a country where 40 percent of the population doesn’t have a bank account. The credit and debit card network is simply cannot be trusted.
Desperate Venezuelans looted delivery trucks and clashed with police. President Nicolas Maduro blamed opposition politicians for the unrest. He claimed that opposition members of the National Assembly were involved attempts of vandalism and some acts of violence. The beleaguered warned that parliamentary immunity would not be able to shield the trouble makers.
Venezuela currently has the world’s highest inflation rate. It is set to hit 475 percent this year, according to an IMF forecast. The high inflation rate has made its currency worthless. The government is trying to introduce new bills in denominations up to 200 times higher than the old ones. But the plan went off the rails when Maduro ordered the 100-bolivar note removed from circulation before the new bills arrived.
Maduro, who has presided over an unraveling of Venezuela’s oil-rich economy, said the 100-bolivar note had to be killed because ‘mafias’ were hoarding it abroad. He sees in it a US-backed plot to destabilize Venezuela.
In response, he sealed the borders with Colombia and Brazil, where he says much of the hoarding is happening. The decision has further aggravated the situation. People are already facing a chronic shortage of food supplies, medicines and other basic goods. And now Venezuelans are cut off from the supplies of basic amenities.
The country’s food, medicine and currency crisis is now a cash crisis too. This has multiplied the woes of Venezuelans, who are already struggling in the face of world-high inflation.
It is ordinary Venezuelans who are affected the most. They are waiting in queue for hours to deposit the doomed bills, when they could actually be working, studying or caring for their families.
Also, while debit and credit cards can be used at stores that accept them, buying gasoline is becoming increasingly difficult because most filling stations accept only cash.
This is terrible. People have money in the bank, but there’s no cash. Four airplanes with the new currency set to arrive from abroad were delayed by international sabotage. Nobody has seen the new currency bill so far. If the replacement bills get further delayed, there is a risk of unrest in Venezuela. The country is already in the grips of a humanitarian crisis. Venezuela has seen many anti-government protests in the past. It is imperative that the government make the new bills available soon. It will save the country from slipping into chaos and win Maduro a brownie point with people.