The Central Bank of Venezuela announced the new re-denomination plan for its fiat currency called “Digital Bolivar.” This new proposal seeks to simplify transactions by slashing six zeroes from the current value of the currency. While it is called digital, it has nothing to do with the proposal of a new central bank digital currency (CBDC), but it claims to have the development of a digital economy in the country as its objective.
As of Oct. 1, the digital Venezuelan bolivar will begin circulation in the economy. Its cash equivalent will get a new 1-bolivar coin, along with banknotes ranging from 5 bolivars to 100 bolivars as part of the six-zero readjustment of the currency.
The Bank states the change will bring positive improvements to the fiat currency, paving the way for a recovery of the national economy that, according to the bank, has been wracked by a series of economic attacks and a financial blockage, referring to the economic sanctions that the government of the U.S has exerted over the country.
While the re-denomination plan is called the “Digital Bolivar,” no central bank digital currency has been proposed in the issued statement. The name is derived from the objective of the measure, which is to “reduce transaction costs in the economy” and “advance in the construction of a modern vision of the currency in everyday transactions.”
This make the third re-denomination plan that the Venezuelan government has executed in less than 15 years. The first changed the name of the currency by adding the “strong” prefix to its name, happened in 2008 when three zeroes were slashed from the currency.
