(Bloomberg) -- Venezuela said it will introduce large-denomination bolivar notes as hyperinflation erases the currency’s value and complicates the most ordinary purchases in the crisis-ravaged nation.
On Wednesday, the country’s central bank posted a statement on its website saying it would begin circulating the new 10,000, 20,000 and 50,000 bills to make payments “more efficient” and “facilitate business transactions” without providing further details.
Six-digit inflation has rendered paper money mostly useless in Venezuela. Consumers generally pay with plastic or electronic transfers despite unreliable banking systems, and increasingly rely on US dollars or other hard currency. Still, many services like public transportation and regulated goods like gasoline require paying in cash with bolivars.
President Nicolas Maduro’s ruling socialist regime has been trying to tame spiraling inflation for years, but has been slow to dismantle a complex system of price and exchange controls. Last August, authorities devalued the ailing currency 95% and rolled out new bank notes -- that effectively chopped five zeros of the previous bills in circulation -- in attempt to simplify transactions.
Before Wednesday’s announcement the highest bill in circulation was the 500-bolivar note. But, paper money has gone scarce, thus forcing pensioners, who are paid their retirements in cash by law, as well as consumers to endure hours long waits at banks and ATMs. Banks limit cash withdraws to about the equivalent of one US dollar, paid out in dozens of notes, while most vendors now refuse to accept the lowest denominated bills.
Venezuela’s annual rate of inflation is running at 99,900%, which is down from 224,900% at the end of last year, according to Bloomberg’s Cafe Con Leche Index. The latest government data puts the monthly inflation rate at 34% in April, down from a high of 197% in January.
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