The Central Bank of Venezuela announced Friday that it would expand its monetary system, with the issuance of three new notes including one of 1 million bolivars, in a context of rampant hyperinflation.
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These banknotes of 200,000, 500,000 and 1 million bolivars “will
begin to circulate gradually from March 8, 2021
” in order to “
meet the needs of the national economy
,” the issuing entity said in a statement.
A fourth year of hyperinflation
Added together, these three banknotes do not even represent the equivalent of one US dollar, which is currently exchanged for 1.88 million bolivars.
A kilogram of tomatoes, eight buns, a 250 ml soda or poor quality soap cost around 1 million bolivars, in a Venezuelan economy marked by a fourth year of hyperinflation, which reached almost 3,000% in 2020.
"
The problem in a hyperinflationary cycle is that the speed at the central bank updating the monetary system is never fast enough
," economist Asdrubal Oliveros told AFP.
The bolivar is in practice replaced by the dollar, which has become the de facto currency in Venezuela.
In stores, prices are displayed in dollars and payments are made in foreign currencies.
To pay in local currency, locals usually use a debit card or make a wire transfer.
The majority of paper bolivars are used in public transport.
The monetary system had previously been expanded in June 2019.
