CARACAS, (Reuters) – Venezuela will introduce six new notes and three new coins starting in mid-December to help alleviate practical problems in doing business with the world’s most inflationary currency, according to the central bank.
Currently, the OPEC nation’s largest note is worth just 2 U.S. cents on the black market, meaning cash transactions are extremely cumbersome.
The bolivar currency has suffered its most dramatic monthly fall in history, down 60 percent since early November against the dollar on the black market, as the country struggles with a major economic crisis that is leaving millions hungry and the medical sector in crisis.
The largest new bill, according to a central bank communique, will be worth 20,000 bolivars, just under $5 on the streets. It will be accompanied by notes of 10,000, 5,000, 2,000, 1,000 and 500 bolivars and three coins of smaller value.
“(This) will make the payments system more efficient, facilitate commercial transactions and minimize the costs of production, replacement and transfer … which will translate into benefits for banking, trade and the general population,” the central bank said.
Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, even getting cash at ATMs in recent months has proven difficult.
On Friday, the country’s point-of-sale machines suffered chronic malfunctions. Unable to process transactions, businesses asked customers to use cash, transfers or pay later.
President Nicolas Maduro blamed the problems on a cyber attack, but he did not provide any evidence. He attributes the country’s economic crisis to an “economic war” led by the opposition with a helping hand from Washington.
Strict currency controls introduced in 2003, which pegged the bolivar to the dollar, coupled with heavy reliance on oil are seen as the root of the crisis by most economists.
Venezuela’s central bank has failed to publish any inflation data for 2016. The International Monetary Fund estimates that price rises next year will surpass 2,000 percent.
The money supply, the sum of cash and checking deposits as well as savings and other “near money” deposits, was up a staggering 12 percent in the two weeks to Nov. 25 and the curve is literally exponential since Maduro’s predecessor Hugo Chavez came to power in 1999.
