Venezuela is to issue banknotes for their new currency on Monday, 20th August 2018, but analysts predict the crisis will worsen. Replacing the old Strong Bolivar, the new Sovereign Bolivar will be based on the socialist government's experimental petro cryptocurrency.
The radical economic move is a world's first, but is more likely to go down in history as a 'world's worst'.
President Nicolas Maduro optimistically describes the move as a 'great change', slashing off five zeros off the now weakened Strong Bolivar. Both currencies will circulate at the same time until further notice. The new Sovereign Bolivar will be issued in physical cash form while being confusingly backed by cryptocurrency - itself allegedly backed by the country's oil. A concept that few claim to understand.
Locals reportedly spent the weekend dashing to shops on Sunday to stock their homes with food in preparation for the economically paralyzing confusion expected to follow the major currency overhaul. Maduro has also (for the fifth time) introduced a significant minimum wage hike. Analysts warn these measures will worsen the crisis, resulting in Maduro's economic management falling deeper into global scrutiny, making much needed foreign investment even less likely.
"Anchoring the Bolivar to the Petro is anchoring it to nothing,"
If the expected disruption from overhauling the nation's currency wasn't enough of a strain on the Venezuelan people, the Minister of the People's Power for Interior Relations and Justice, Néstor Luis Reverol declared (with one day's notice) Monday 20th August 2018 a bank holiday in order to facilitate the currency change. This also means suspending all electronic banking services as of 6pm Sunday.
Such abrupt inconveniences are nothing new for the Venezuelans who have been suffering through shortages of basic goods, power outages and paralyzed public services since the beginning of the recession in 2014. After just four years, inflation is expected to reach a staggering one million percent this year, estimates the International Monetary Fund.
The economic and political crisis is so extreme that it has triggered a mass exodus which the UN has called 'one of Latin America's largest mass-population movements in history'.
The new Sovereign Bolivar, named as such to distinguish it from the current Strong Bolivar (which has proven to be anything but), will be anchored to Venezuela's widely discredited cryptocurrency, the petro.
Each petro will be worth around $60 (£47), based on the price of a barrel of the country's oil.
But analysts are skeptical - and there are fears the measures could actually make things worse.
"There will be a lot of confusion in the next few days, for consumers and the private sector,"
Cryptocurrency rating site ICOindex.com has labeled the petro a "scam," while the US has banned its nationals from trading in it.
It is also not the first time Venezuela has tried this, hence the skepticism.
Mr. Maduro's predecessor, Hugo Chavez, knocked three zeroes off the bolivar in 2008, but this failed to prevent hyperinflation.
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