Venezuela introduces new currency with six less zeros- Know all about it 

Venezuela on October 1, 2021 introduced a new currency with six fewer zeros. The highest denomination of the new currency will be 100 bolivars, as compared to the earlier higher denomination of 1 million bolivar. 

Venezuela's old currency had almost become worthless as a result of years of the world’s worst inflation. The new currency is expected to help ease both cash transactions and bookkeeping calculations. 

Why has the new currency been introduced?

Venezuela's old payment system was near collapse due to inflation and the large number of digits, which made practical math almost unmanageable. Under the old payment system, a two-litre soda bottle could cost about 8 million bolivars. 

With many of the bills scarce, customers are often forced to pay thick wads of paper. There was also a limit on daily withdrawals with banks allowing customers to withdraw a maximum of 20 million bolivars in cash a day and sometimes even less if the bank is running short of bills. 

So the consumers had to largely rely on digital payment methods or on US dollars to make purchases. The number of digital transactions has gone up in recent times, with more than 60 percent done in US dollars. 

The new currency, with six fewer zeros, will hence do away with the problem of juggling almost endless strings of zeros.

Background

The currency change was announced last month by Venezuela’s Central Bank. Officials announced that the payment systems will be modernized to expand digital use of the bolivar.

This is the third time when Venezuela has cut down zeros from its currency. Three zeros were cut from Bolivar under the rule of late President Hugo Chávez in 2008, while current President Nicolás Maduro, cut five zeros in 2018.

The bolivar is currently the weakest currency in circulation with 1 US dollar converting to approximately 4.08 million bolívars as of September 25, 2021.