Venezuela issues new banknotes amid hyperinflation
Organization: Department of International Cooperation Publish Date: 2016-12-07 16:53
Sources: BBC News; CNN
Venezuela will begin issuing new higher-value notes to help deal with some of the practical problems of hyperinflation.
The central bank of Venezuela said that six new bills ranging from 50 to 20,000 bolivars would come into circulation on Dec. 15. The highest denomination currently in circulation is the 100 bolivar note.
Hyperinflation means very little can be bought with 100 bolivars, which is officially worth 15 U.S. cents, or just 2 cents based on widely-used unofficial exchange rates.
Inflation in Venezuela is expected to rise to nearly 500% in 2016 and to a whopping 1,660% in 2017, according to the International Monetary Fund. In November alone, the currency tumbled 60% against the dollar on the black market.
Venezuela is in the grip of a deep economic crisis that has led to serious food and medicine shortages for ordinary citizens. The country is heavily dependent on oil for revenue, but this main source of income has been hit hard by a slump in global oil prices. The country could officially default on its debt in mid-December this year.
The central bank said the new bills would make the system more efficient, facilitate commercial transition and minimize production costs, translating into benefits for banking, trade and the general population. However, economists don't expect the move to make life easier for most Venezuelans any time soon.