What Venezuela is doing, even if out of necessity, is something that many other countries are planning to do in the future.
Venezuela is a country that is the center of attention in Latin America, but not for the reasons its population would like. With extreme inflation that has caused a humanitarian crisis, in addition to being led by a dictatorial head of state, the country is still trying to innovate financially to improve its situation. The government of the South American country has announced that it wants to end paper money and be the 1st country in the world with 100% digital money.
This could put Venezuela in the front line of a monetary revolution that could become the new norm around the world. Of course, many remain skeptical, as Venezuela has already proven difficult to leverage its solutions to the many problems it faces.
According to local information from the Telesur television system, President Nicolás Maduro said in a public address that Venezuela will have a 100% digital economy:
“They are at war against our physical money. We are preparing this year for a deeper, expanding digital economy. I have set the goal of an economy that is 100% digital.”
In this case, “They” is a reference to the U.S. and other countries that have approved several economic sanctions against Venezuela, accelerating and worsening considerably the country’s financial crisis and hindering a possible recovery.
Still according to the information, Maduro intends to “make all the physical money disappear in the future.
Besides the physical currency being at “war,” as placed by the president, Bolivar, Venezuela’s official currency, is hardly used by its population. To get an idea, in the last 3 years the fiduciary currency of the country has lost 99.9% of its value, which has caused a large number of new bills with higher values to be printed. Currently it is possible to find banknotes of 50 thousand Bolivares.
With this, using the bills is more laborious than anything else. So, according to information passed by the president, 18,6% of the commercial transactions are made in dollar, 77,3% are made through credit cards and only 3,4% are made with cash in hands.
It is worth mentioning that the mature government does not make restriction on the use of the dollar inside the country, in some cases it is even facilitated.
Attention will turn to Venezuela and its digital economy
What Venezuela is doing, even if out of necessity, is something that many other countries are planning to do in the future. So the South American country may be the perfect “guinea pig” to test how a 100% digital economy can behave and what advantages it will bring.
Surely many countries, mainly Europeans and Asians, will keep an eye on this new financial development of the country, which may even be the basis for a very significant global change.
We still don’t know how cryptomoeda Petro, the first state cryptomeda in the world, will be used in this context.