Venezuela Plans Shift to Fully Digitalized Economy

Venezuela’s government is planning to move to a fully digital economy as hyperinflation has made worthless bolivar notes practically disappear.

The U.S. dollar has operated as an escape valve for Venezuela amid U.S. sanctions and collapsing oil revenues, President Nicolas Maduro said in a televised interview with Telesur on Friday. He said 18.6% of all commercial transactions are in dollars, while 77.3% are carried out in bolivars with debit cards. Only 3.4% are paid with bolivar notes.

“They have a war against our physical currency. We are moving this year to a more profound digital economy, in expansion. I’ve set the goal of an economy that’s 100% digital,” Maduro said, adding that physical money will eventually disappear.

It’s the latest ambitious currency plan from Venezuela’s president, with no guarantee of success. In 2017, with the bolivar in freefall, Maduro vowed that the nation would create a cryptocurrency called the Petro, backed by reserves of oil, gas, gold and diamonds. The Petro launched in 2018; the U.S. called it a scam.

Venezuela’s currency has lost 99% of its value during three years of hyperinflation, forcing the country to issue higher-denomination notes that in turn become useless in record time. Inflation soared 5,790% in the last 12 months, according to Bloomberg News’s Cafe con Leche Index.

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