By Jeanette Tan, International News Writer
On Monday, January 16, the Venezuelan government has begun issuing new banknotes in response to the country’s hyperinflation crisis.
Three new banknotes, denominated in 500, 5000, and 20,000 bolivars, have been released in order to aid citizens in making essential everyday transactions.
Prior to this, the largest denomination was the 100-bolivar note which is only worth a few American cents at today’s rate. This meant Venezuelans had to carry huge wads of cash for even the most basic purchases. Nevertheless, the new 20,000-bolivar note is still worth less than 6 U.S. Dollars on the black market.
Venezuela is currently considered to be the country with the highest inflation rate in the world.
While the Venezuelan government’s last published figures for inflation was 180 percent in December 2016, the International Monetary Fund has forecasted that inflation in the country will reach 1,600 percent this year.
Last month, President Nicolas Maduro announced that new notes will be issued and old notes, including the 100-bolivar note, will be withdrawn from circulation. He said the aim of replacing old notes is to combat organized crime groups who were hoarding Venezuelan currency abroad.
Citizens were initially given 72 hours to exchange their 100-bolivar notes, leading to massive queues at banks. This move also caused social unrest among citizens, which led to widespread protests and looting around the country. Some people even burned the 100-bolivar notes, believing they had no value after President Maduro’s announcement.
President Maduro has since postponed the withdrawal of old notes twice, with the new extension set to February 20. The latest deadline appears to have resolve any panic on Monday as it allows for a smoother transition to the usage of new notes.
Many people, however, spoke of complications regarding the changeover. One bank manager said that Automatic cash machines are not yet dispensing the new money because they had not yet been programmed to handle the bigger notes.
In an interview with AFP, economist Anabella Abadi said, “Printing the new banknotes makes Venezuelans’ lives easier, but it will not rein in inflation.” She added that “Coins and bills in the country only represent 8 percent of total liquidity.
The greatest pressure is from electronic transactions.” A Caracas resident told the BBC, “I think it is more of the same. Effectively what we are doing is putting more money on the street, attracting more inflation.”
Venezuela’s economy is largely based on petroleum, and many experts have attributed the country’s financial crisis to the fall in oil prices.
A version of this article appeared in the Tuesday, January 24th print edition.
Contact Jeanette Tan at