The Venezuelan national currency, Bolívar, has had six zeros less since October.

The move by the central bank makes bookkeeping easier in the South American oil country, where inflation has reached over 1,700 percent in the past twelve months.

Not much more.

It is the third currency reform in recent years.

In 2007 the Bolívar lost three zeros under the then President Hugo Chávez and became the "Strong Bolívar".

In 2018 another five zeros were deleted and the currency was renamed “Sovereign Bolívar”.

With the latest adjustment, the Bolívar has lost 14 zeros in 14 years.

Tjerk Brühwiller

Correspondent for Latin America based in São Paulo.

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The currency is now called “Digital Bolívar”.

And that is no accident.

The central bank has announced that it will design new bills and even introduce a bolívar coin.

The introduction of new and now obsolete notes of 200,000, 500,000 and one million bolívar was only a few months ago.

In any case, hardly anyone in Venezuela pays with cash these days.

It is estimated that around 98 percent of all transactions are made with cards or digital payment apps.

The cashless economy only reaches its limits in rural areas or where there are frequent power outages or network disruptions.

The dollarization of the Venezuelan economy

Digitization also makes it easier to cross out a few zeros again in a few years. Hardly anything will change in the Venezuelan economy with the new currency. The country continues to suffer from one of the deepest economic depressions the region has ever experienced. Four fifths of economic output has been lost since 2014. The population is largely impoverished. Three quarters of Venezuelans get by on less than $ 1.20 a day. Most, however, have significantly less. The minimum wage is around $ 2.50. Hardly anything can be bought with it. Millions of Venezuelans have left the country. Many of those who continue to live in Venezuela receive financial support from relatives abroad.

It is questionable whether the Bolívar - digital or printed - will still have any meaning in the coming years.

The dollarization of the Venezuelan economy continues.

President Nicolás Maduro himself opened the doors to the currency, which for a long time was only in circulation informally.

In 2019, hyperinflation, which had climbed to several 100,000 percent at times, forced the government to make adjustments.

Price controls and restrictions in foreign exchange trading have been relaxed, and the official exchange rate has been brought closer to the market rate.

The government later allowed transactions in foreign currencies.

Inflation flattened out at a high level.

At the same time, dollarization has given impetus to the informal economy.

Preservation of power as the primary goal

At the same time, the socialist government has given the private sector more space in economic sectors that have long been controlled by the state. The basis for the opening is a so-called “anti-blockade law”, which allows cooperation between state-owned companies and private companies. This is also intended to circumvent certain sanctions that the Venezuelan state and certain state-owned companies have been subjected to. In the meantime, for example, the private sector handles a large part of the imports of goods on which the country is dependent due to a lack of domestic production.

These easing are not voluntary or in the course of structural economic reforms, but are rather an adjustment of the government to the conditions. With the collapse of the economy, the Venezuelan state has also lost its strength and influence. Today, the Venezuelan state no longer has the productive and financial capacities to keep the “shop running”.

This also applies to the state's public services and social programs, which are being scaled back and are increasingly concentrating on the large metropolises. In parts of the country, Venezuelans are dependent on private service providers in many areas such as transport, energy and water supply. The black market is also flourishing, which now accounts for around 20 percent of the gross domestic product. In addition, a semi-legal "gray" market has established itself.

The government's influence on the economy is declining, and more space is opening up for the private sector.

However, the government continues to make the rules.

Above all, it pursues one goal: to maintain power.

The apparent pragmatism that President Maduro has shown for some time on economic issues should therefore not be overstated.

Its loosening and opening have so far done nothing to make Venezuela more productive or to improve the living conditions of Venezuelans.

Both have stabilized - at their lowest point.