The UK Club have received the following update from local correspondents Globalpandi, regarding Venezuela's monetary reconversion and what it means for Members.
In April, the Venezuelan President Nicolas Maduro announced a monetary reconversion in which the government planned to remove three zeros from the “Strong Bolivar,” the national currency, renaming it the “Sovereign Bolivar”, but postponed the measure at the request of banking industry leaders who said the financial system was not ready for the changes.
Three months later in 25th July, it was announced the removal of five zeroes rather than the three originally planned, and during the same television broadcast he showed a new set of money notes to be released next month and fixed 20th August as deadline for the new monetary system to entering in force.
This very week last Monday 13th August, president Maduro has announced some additional measures, by which starting from 20th August Venezuela will have two official units of account; the “Sovereign Bolivar” the new monetary cone coming out from shredding five zeros to the old highly depreciated “strong bolivar” and the state-issued, oil-backed cryptocurrency, the so-called Petro. It is expected that with the introduction of the “Sovereign Bolivar” new monetary instruments by way of notes and coins will be out in the domestic market, relieving the serious shortage of cash affecting the retailing sector for months and increasing the prices too.
The Petro will begin also to operate as the mandatory unit of account for the state owned PDVSA oil company. Meanwhile the “Sovereign Bolivar” would be pegged to the Petro, in an attempt to avoid the fate of the old highly depreciated “strong bolivar”, whose inflation may exceed 1 million percent by the end of this year, according to the projections of the IMF.
Members can read Globalpandi's update in full here.