After launching the world’s first pre-mined national cryptocurrency, the petro, Venezuela’s President Maduro is now planning on dropping zeros off the bolivars in a desperate attempt to curb the already disastrous level of inflation.
Petro sales, which are backed by the country’s oil resources, have done little to improve the current economic situation, and there is reason to believe that simply dropping zeros will only result in greater headaches for retailers and citizens.
Maduro’s main opponent in the upcoming presidential elections, due in May, is calling for more radical measures such as pegging the bolivar to the dollar. Indeed, critics of Maduro’s bill believe that redenomination will fail to address the core of the problem in a country where prices of food and medical supplies are soaring. Dollarizing the economy does come with some risks, including limited freedom to manage the country’s monetary policy. But as the economic situation worsens, some believe the time has come to adopt policies that can stabilize the economy while offering citizens the necessary liquidity to carry on their daily lives.
If Maduro’s plan is adopted, only certain denominations would be affected. This would result in a double pricing system and cause even greater confusion for consumers. In an effort to curb inflation, a new series of banknotes was already issued in January 2017.