Monetary Reconversion around the Corner in Venezuela

Venezuela has been experiencing one of the hyperinflation never seen before, that the government by economic measure since 2008 has carried out two monetary reconversions where it has framed a program of legal order by changing the monetary cone.

A little history

Since the 20th century, coins such as puyas, media, lochas and forts have circulated in our country, colloquial names for the coins of 25 cents, 50 cents, 12.5 cents and five bolivars and bills 5, 10, 20, 50, 100 and 500 bolivars, where Venezuelans could make various transactions for the payment of goods and services, with no shortage of paper money.

In the 1980s, Venezuelans could buy products with prices in the middle, loaches and forts, colloquial names for the coins of 25 cents, 50 cents, 12.5 cents and up to five bolivars, while the salary of a worker was stipulated at 900 Bs, equivalent to $ 209.30 this small income the parents could buy food, clothes, shoes and some could travel, at this time the economy was a bit stable.

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But in 1998, Venezuela came to fall into the worst plague of government that it has had during the 40 years of democracy that it had existed, Chavez began to change both in political and economic terms, after his two years in government, that until the country name change Bolivarian Republic of Venezuela, the Central Bank of Venezuela (BCV) prints 1,000 and 2,000 denomination banknotes.

After 10 years in government, President Chavez carried out the first monetary reconversion, because the economy was devaluing the currency each time, inflation consumed the pockets of Venezuelans every day, the prices of products were no longer 1,000, but more than 1,000. .000. In 2008, the Bolívar was renamed Bolívar Fuerte (Bs.F.), eliminating three zeroes and presenting a new monetary cone consisting of six banknotes (of 2, 5, 10, 20, 50 and 100 strong bolivars ) and seven coins (1 cent, 5 cents, 10 cents, 12.5 cents, 25 cents, 50 cents and 1 bolívar fuerte), where the great slogan that the government was listening to was that this Bolivar Fuerte was not going to bring down no US dollars, because we have built a strong economy.

In the years 2010, this new monetary cone brought with it a shortage of paper money where there was the purchase and sale of banknotes, for one to get to have banknotes in the hands there was not it in the banks but in the hands of the merchants that sold it up to 300% of its face value. Apart from the fact that in 2013 the shortage of basic necessities began to be experienced, this being one of the phenomena that produced hyperinflation and the black market in Venezuela.

By mid-2018, with the new president Nicolás Maduro there was another monetary reconversion where this time five zeros would be subtracted from the Bolívar Fuerte, having a total in both governments of 8 eliminated zeros, apart from passing a new monetary cone that would be called the Sovereign Bolivar where power was towards the people. But in less than a year of this new monetary cone, BCV announced that it will "gradually" put into circulation the Bs. 10,000, Bs. 20,000 and Bs. 50,000 notes, since inflation made this new cone bite the bullet.

Some of the economic measures that the government has adapted to this inflation was the cryptocurrency called Petro, which did not get anywhere, there was no trust in this cryptocurrency created and managed by the government itself. In 2019 it was said that Venezuela would be dollarized, many businesses and services began to charge in dollars since the black market prices were stipulated in dollars, the dollar bills began to be seen in each part of this country, but even the economy continued worse and worse, none of the measures that this government has implemented since President Chavez arrived in 1998 has been of no use, each time the country is drowning with poverty, being a country so rich in minerals and the first with the largest oil reserve, in 2018, Venezuela's reserves amounted to more than 302,000 million barrels of crude.

At present there is no direct information from the government, that a new conversion will be carried out removing 6 zero, but if you have heard in different news about this new conversion, this new conversion being a total of 14 zero to the currency, it has not yet been established if there will be a currency exchange, but if a reconversion is urgently merited, due to the handling of transactions that are cumbersome with high numbers.

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