Venezuela removes six zeros from its currency to make payments easier – Bitcoin News

The Venezuelan government is considering a new conversion of its fiat currency. The proposal currently under study would remove six zeros from the inflation-prone bolivar. This would help businesses process taxes and vendor payments, which are absurdly complex by today’s numbers. However, according to the consulting firm, the dollar is the dominant coin in retail payments in Venezuela.

Venezuela wants to change its currency

The Venezuelan government is considering a mathematical conversion of its currency, the sovereign Bolivar, to simplify payments for large companies. This change would cut six zeros, making it easier to calculate payments that are now reaching large sums. Although there has not yet been an official announcement, Bloomberg reported that three knowledgeable people commented on the topic.

The new measure is designed to help companies that have had to make large payments in bolivars. This would also help consumers who pay in Bolivar through POS terminals that now have to swipe their cards multiple times due to system restrictions. However, this measure shows that the government has failed to control inflation and the devaluation of the currency. The bolivar is now converted at approximately 3,200,000 PVCs per dollar (or 3.2 converted PVCs per dollar).

Most of the payments in the country are now digital so the government would not have to print many bills to replace the amount of cash in the market. According to some estimates by Econometrica, a national advisory agency, only 1.9% of the money in the Venezuelan system is cash. The highest grade has a value of VES 1,000,000, or about $ 0.30, and is only useful for paying for bus fares.

Not the first time

This is not the first time Venezuela’s central bank has taken such a move. In fact, citizens have already gone through this process twice. The first event of the currency conversion took place in 2008 and deleted three zeros from the bolivar. At that time the country was in a completely different situation, with annual inflation of only 20.44%.

The second conversion was used not so long ago, in 2018, and removed five zeros from the currency. This time Venezuela found itself in dire straits, facing a process of hyperinflation and the start of sanctions that would affect economic development. It was around this time that the government introduced Petro, their official cryptocurrency, to counter this situation.

This means Venezuela will have 14 zeros removed from its currency in less than 15 years. However, without effective anti-inflation measures, this will only serve as a band-aid for some citizens affected by the current situation.

What do you think of the recent change in fiat currency in Venezuela? Let us know in the comments section below.

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