Venezuela’s prolonged economic crisis has not slowed down. The International Monetary Fund projects an 1,000,000% inflation rate by the end of 2018 (Ellsworth). The country’s paper currency, the bolívar, has become nearly worthless while the government scrambles to implement different monetary reforms to ease inflation and reboot the economy. Despite the government’s attempts, Venezuelans have taken matters into their own hands, turning to the black market, exchanging goods and services, or using the U.S. dollar for functionality.
The Maduro government has staged a plan to help curb the staggering inflation crisis in the country--- by creating a new currency. The idea of implementing a new currency in Venezuela is not new, as the government had tried multiple times to restore some value in their worthless monetary system. The bad news is the country has a terrible track record with financial decisions dating back to when the value of oil took a nosedive and sent the country spiraling into crisis. Their first mistake was backing 98% of their economy in oil.
This article was written as part of the course “Latin American Economic Development” offered by Professor Marla Ripoll, Department of Economic, University of Pittsburgh.
The United States Treasury Secretary announced on last March that President Donald
Trump signed an executive order banning all transactions within the United States or by US
citizens that involve Venezuela’s new cryptocurrency. The petro, which was Venezuelan
president Nicolás Maduro’s plan to combat the rising hyperinflation and devaluation of the