Venezuela introduces new banknotes as hyperinflation continues

The Central Bank of Venezuela says it has introduced three new denominations of banknotes in a struggle to combat the country’s ongoing hyperinflation.

In a statement, the central bank said that it would be introducing new 10,000, 20,000, and 50,000 bolivar denominations on June 13. The highest of these notes, the 50,000 bolivar note, is worth only around $7.60 based on black market rates, which is more than Venezuela’s monthly minimum wage.

The central bank said it had issued the new denominations “in order to make a more efficient payment system and facilitate business transactions”.

This is the second time Venezuela has introduced new banknotes in less than a year, despite attempts to stabilise the currency. Last August, five zeroes were dropped from the Venezuelan currency when it was rebranded as the ‘sovereign bolivar’, replacing the previous currency of the ‘strong bolivar’.

Inflation rose year on year by 130,060.2% in 2018, up from 862% in 2017, according to the central bank. The largest note in circulation was previously the 500 bolivar note, which is now worth only $0.08.

The news comes two weeks after the UK-based banknote printer De La Rue announced the Central Bank of Venezuela had failed to pay £18 million ($23 million) in fees for its banknotes, due to US sanctions against the country. It is thus unclear how the new banknotes were printed.

In a statement to Central Banking, a De La Rue representative confirmed the company’s contract with the Central Bank of Venezuela has not been cancelled, but declined to comment on the source of the new banknotes.

The hyperinflation Venezuela has suffered has caused much of the economy to transition towards credit cards, as cash use becomes increasingly impractical. The IMF forecast in October that inflation could hit 10,000,000% in 2019.

The country has also seen increased uses of less common methods of payment, such as gold and crypto assets. Data from monitoring resource Coin Dance reveals that purchases of bitcoin have increased nine-fold in Venezuela since the start of the year.