An MNBC for Venezuela
Venezuela’s launch into the MNBC race is no surprise: the country is particularly pro-crypto, and is looking to find solutions to fight US economic sanctions. Already, he had issued a cryptocurrency, the Petro (PTR), which had not been as successful as expected.
The launch of a central bank digital currency aims to digitize the bolivar soberano (VES), its fiat currency. According to the official statement from the Central Bank of Venezuela, the MNBC does not wish to modify the VES, but simply to facilitate access:
“The introduction of the digital bolivar does not affect the value of the currency, that is, the bolivar will not be worth more or less, its use will simply be made easier. “
The press release cites three advantages of issuing an MNBC in Venezuela: a modernization of the currency, a better connection of the population with its currency, and a reduction in transaction costs. As of yet, it’s unclear what technology this central bank digital currency will be based on.
👉 Discover our dossier on central bank digital currencies (MNBC)
A bolivar that loses zeros
The digital soberano bolivar will therefore not change value, but it will lose some zeros. The central bank announces in fact that six zeros will be removed from the value of the VES, in the face of the catastrophic inflation suffered by the currency. In 2020, annual inflation was estimated at 2,300%.
This is the second time that the government has chosen to remove zeros from its fiat currency: in 2018, five zeros had disappeared, while inflation reached over 1,800,000%. The economic crisis has only worsened against the background of the health crisis, which is why the government is launching a new lifeline.
The release of this MNBC is indeed rushed: most of the other countries that have embarked on the adventure will take years to test and develop the digital version of their central bank money. This therefore clearly shows the urgency in which Venezuela found itself, and it confirms once again that Latin America is a land of welcome for new payment technologies… Out of necessity.
👉 To read – Venezuela: the government uses Bitcoin to pay Iranian and Turkish companies
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About the author: Marine Debelloir
Associate Editor on Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that arise from the blockchain and I like to find the most delicious information to share with you.
All articles by Marine Debelloir.