The hyperinflationary country of Venezuela will renovate its national currency by launching a central bank digital currency (CBDC), called a “digital bolivar.”

Digital Bolivar launch date:

The “Digital Bolivar” currency will be in circulation as of October 1, 2021.

Last Thursday, Venezuela’s central bank announced that it would adjust six zeros on its overly inflated currency.

The digital bolivar coin will be launched, along with banknotes in denominations of BS 5 to BS 100.

The move came as a solution to Venezuela’s suffering from hyperinflation for years.

The country’s inflation peaked in 2018, rising 1.8 million percent, while in the two successive years it witnessed inflation of 9,500 percent and 3000 percent, respectively.

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The latest renaming of currencies circulating in the country will be the third in the country’s recent history.

The late Venezuelan President Hugo Chavez changed the value of the currency for the first time by 1,000 to 1, while his successor, Nicolas Maduro, made 100,000 to one in 2018, at the height of hyperinflation.

The country’s national currency has depreciated so much that most of the local economy is now operating in US dollars, despite the US sanctions imposed.

Venezuela and the push of the digital economy:

President Maduro first revealed his plan to launch a digital version of the bolivar last February, when he laid out his plan to fully digitize the Venezuelan economy by the end of 2021.

He even claimed that the country’s economy had been digitally transformed by 77% by the end of 2020.

The upcoming Bolivar digital currency will use an SMS-based exchange system for transfers and transactions between users.

In addition, the Central Bank assured that the digital version of the fiat currency will not affect the value of the bolivar in any way.

It is worth noting that the Venezuelan government had previously launched the “petro” currency in 2018, which is a digital currency backed by the country’s rich oil reserves.

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Although the government tried to circumvent US sanctions with the “Petro” currency and pushed citizens to use the digital currency, these efforts were unsuccessful.

Other than Venezuela, many other countries around the world are either considering or testing the release of their digital central bank notes.

While some smaller countries have already launched digital currencies for central banks, China is expected to be the first major economy to trade a digital currency.

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