Venezuela abandons cash – will become a fully digitalized economy

Several times, Trijo News has written about Venezuela’s digital currency project petro. When it launched in 2018 it became the world’s first national digital currency.

The stated reason for the launch of the cryptocurrency has always been to counteract the inflation for the country’s fiat currency, the bolivar. The inflation, the country’s government claims, has been created by US sanctions.

Now, this inflation may mean that Venezuela, in the near future will be on its way to a completely digital economy, Bloomberg reports.

Has lost 99 percent of its value

The country’s inflation has increased by 5,790 percent over the past 12 months, and over the past three years, the bolivar has lost 99 percent of its value against the dollar.

The largest banknote that the country currently has in circulation, the 50,000 bolivar, is currently worth about $0,04.

Many abandon the bolivar for the dollar

This has had the effect that very few Venezuelans are using physical money. Many have instead switched to using the dollar.

In an interview with the state-run television channel Telesur, which was broadcast on Friday, Nicolas Maduro, the president of Venezuela, reveals that 18.6 percent of all transactions in the country are made with the dollar. 77.3 percent are made with the bolivar using debit cards and only 3.4 percent of the transactions are made with cash.

So now, the idea is that the country is to stop having a physical economy altogether, says the president.

“They (the US, editor’s note) have a war against our physical currency. We are moving this year to a more profound digital economy, in expansion. I’ve set the goal of an economy that’s 100 percent digital”, he says in the interview, according to Bloomberg.

Unclear if the petro is involved

When the Venezuelan economy will go completely digital is currently unclear.

The same applies to the question of what a “digital economy” actually means. But given how hard the country has previously invested in petro, it wouldn’t be a surprise if the cryptocurrency will be involved in some way.

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