Venezuela’s economic crisis has created shortages of food, prescription drugs and other necessities. Oil revenues have slowed, and simultaneously, the country’s currency – the bolívar – has undergone historic inflation. Venezuelans require sacks of cash for even simple transactions.
To fix these economic ailments, the government instituted a seemingly simple solution: print cash in larger denominations. To replace the nearly worthless 100 bolívar notes the government is printing new bills with values between 500 and 20,000 bolívars.
“Larger denomination notes will actually facilitate commerce in the short term, but I think actually though it’s going to exacerbate inflation,” Smilde says. “Inflation has a lot to do with perceptions and reinforces the idea that people have that currency is losing its value.”
What you’ll hear in this segment:
– What the effect will be on the day-to-day life of Venezuelans
– Why printing more currency will only be a temporary fix
– How Venezuela might be able to pull itself out of economic turmoil
Written by Morgan O’Hanlon.