Copycat Currency: Venezuela Follows India into National Demonetization
Embattled Venezuelan President Nicolas Maduro announced on Sunday that the 100-bolivar bill will be decommissioned.
2016 has become an all-out war against cash. Last month, India almost instantly demonetized their most used paper currency notes, the 500 and 1000 Rs. This has caused massive problems throughout the country, resulting in the deaths of people as they wait in line to exchange money, and a soaring market for Bitcoin.
Now, embattled Venezuelan President Nicolas Maduro announced on Sunday that the 100-bolivar bill will be decommissioned.
Haven’t we heard this before?
In India, Prime Minister Narendra Damodardas Modi announced on Nov. 8 that the government would remove India’s most used currency notes to fight “black money,” or money that is undeclared and untaxed in the underground economy. On Sunday, President Maduro seems to have taken a page out of Modi’s book, referring to “mafias” smuggling the currency.
President Nicolas Maduro said on state television:
“There has been a scam and smuggling of the one hundred bills on the border with Colombia. We have tried the diplomatic way to deal with this problem with Colombia’s government; there are huge mafias. I have decided to take out of circulation bills of 100 bolivars in the next 72 hours. We must keep beating the mafias.”
Venezuela is in the middle of a vicious case of hyper-inflation that has seen the rate for their bolivar versus the world’s global reserve currency, and the U.S. dollar, fall over 50 percent in the black market within the past month. People wait in line for hours to shop for food or use ATMs. Paying a supermarket bill without a debit or credit card can often require a backpack full of cash. Many are asked to use bank transfers instead of cash or even card payments.
Bitcoin trading volume all-time high
Demand for Bitcoin has risen dramatically in Venezuela, as it has in India, with the amount of Bitcoin purchased on LocalBitcoins.com growing 1000 percent within the last six months, according to Coin Dance. With the bolivar losing so much value, it may be hard for Bitcoin to be purchased effectively in the region, as its price continues to move in the opposite direction.
Venezuela is on a growing list of nations with national currency devaluations. The list includes China, which has seen six national devaluations in the last twelve months, Zimbabwe, Brazil, Argentina, Spain, Italy, Great Britain and Ukraine. Every weakening of a nation currency, or a cash ban by a national banking system, seems to strengthen the global demand and value for Bitcoin.