The redenomination plan with regard to Venezuela’s first official currency “Digital Bolivar” was revealed once again by the country’s central bank i.e. Central Bank of Venezuela (CBZ). CBZ wants to take out “six” zeros for the existing value of the Digital Bolivar. Although the currency’s name suggests that it is “digital”, however, there is nothing in it that suggests that it would be like the CBDC. However, it does talk about the creation of an economy based on digital data in the future.
A statement has been issued by CBZ on the 5th of August, 2021 with regard to the upcoming “Digital Bolivar”. In the statement, CBZ revealed its proposed application of a fresh redenomination plant for its upcoming normal fiat/currency. The plan was denominated earlier because somehow the plan was leaked and made its way into the media. But the plan has now once again be redenominated.
The Venezuelan plan for the country’s official currency has been called as “Digital Bolivar”. CBZ was of the view that it needed to take out six zeros currently prevailing in the proposed fiat’s value by slashing. It is expected that by doing so CBZ would be able to make the payment process convenient as well as efficient. At present, it costs around 4,000 VES to acquire just one Dollar. Supposing a person wants to acquire a hefty amount in USD then there will be a lot of zeros absurdly in the VES.
CBZ is hopeful that by slashing 6 zeros, there is going to be a massive change in a positive way. Not only this would be convenient, but will also improve the usability of the VES. The bank further said that with the new plan, they are also expecting the national economy to recover drastically. CBZ stated that the country’s economy had had to face multiple challenges in recent times. Unfortunately, because of the weak economy, the country could not keep up with the rest of the world. The bank also discussed the restrictions and sanctions that were imposed upon the country by the US Government.
When the plan made its way into the media, the majority of people thought that “Digital Bolivar” is something like a CBDC. However, this assumption was duly clarified by CBZ. The bank informed that the word “Digital” in the “Digital Bolivar” does not mean “CBDC” at all. What it really means is that it will slash the exorbitant amount of zeros when acquiring currencies like USD or Euro into multiple thousands.
However, the redenomination plan does speak about the need to have a CBDC. However, the proposed “Digital Bolivar” has nothing to do with the CBDC. In fact, CBZ is of the view that it needs to have CBDC at some point in time in the future. However, for the time being, they cannot afford to develop any official CBDC for Venezuela.