Venezuela’s Power Outage: Cash to the rescue
This post is also available in:
Venezuela’s massive power outage, which began on 8 March, has resulted in 31 million residents losing access to water, food, fuel and cashMoney in physical form such as banknotes and coins. More – leaving people fearing for their lives and suffering under deteriorating conditions. As cars and public transport stood still amidst pitch black traffic lights, thousands of commuters were forced to walk home. Tensions were high in hospitals operating without generators, where emergency cases and premature infants were struggling to survive; security was at threat as crime rates soared with looters desperate to access basic necessities. It’s a dark time for Venezuela that has left over 70% of the country paralyzed in fear.
1,810 megawatts of electricity was cut from the national grid due to a fault in a high-voltage line that shut down 11 of 12 turbines at the Macagua hydroelectric plants, according to a report from the state power company seen by Bloomberg. Many are calling it an electrical war – one between President Nicolás Maduro and the US-back opposition trying to oust him. While others have differing opinions, it’s clear that the blackout has furthered chaos in a country already experiencing political and economic turmoil.
Venezuela is no stranger to power cuts, especially since the 2007 nationalisation of its power grid. In 2016, Maduro imposed a 60-day state of emergency that entailed a shortage of electricity and water – but rarely has Venezuela been without power for such a long period of time or has seen one of grave magnitude.
To make things worse, Venezuela’s economy has been on the brink of collapse that makes the simplest of tasks – such as using moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More – basically inaccessible. The country has been facing soaring inflation – exceeding 1,000,000 in 2018 and projected to reach 10,000,000 in 2019 – and double-digit negative GDP growth that weakened its currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More, the bolívar, which is now regarded as worthless.
In an attempt to salvage its economy, the Venezuelan government decided to move away from prioritising paperSee Banknote paper. More bills and introduced itself to the world of digital payments. Venezuela launched its national cryptocurrency, Petro, in February 2018 and has since relied heavily on electronic payments. But the Petro garnered attention for the various issues it would bring about – and with the onset of the power outage, transactions have become almost impossible. With the country’s currency holding very little value, how does one move forward?
We have observed the trend of many nations moving away from cash in favor of digital payments, but Venezuela’s situation shows us how a country stricken by disaster together with a cash shortage is living the nightmare consequences. It’s the perfect – although unfortunate example of how in crisis situations, the unpredictability of a digital currency falls short against the resiliency of cash, which endures system failures and power outages.
“I’m desperate,” said Maria Isabel Garcia, a 39-year-old office worker who couldn’t buy food for her three young children because she wasn’t able to withdraw money out of the bank. Hit by yet another new nationwide power cut last 25 March, it seems that the country would have to start adapting to their new norm.
Of course, it goes without saying that cash can only be usefully managed in times of crises if it carries value – which signifies the importance of preserving its existence in society as a secure and efficient tool. Let’s have another look at the vital role cash plays in during disasters:
This post is also available in: