The central bank plans to cut up to six zeros on its banknotes in August, Bloomberg said, citing three informed sources.
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The deletion of zeros means that one dollar (21.5 crowns) would now correspond to the value of 3.2 bolivars instead of the current 3.219 million bolivars.
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| Hyperinflace |
| Inflation is an increase in the price level. Hyperinflation is such high inflation that it exceeds 100 percent. In Venezuela, where the government has an authoritarian socialist regime, this has been happening since 2016. At the end of 2019, the International Monetary Fund (IMF) estimated that annual inflation there was 10 million percent.
Zimbabwe has also been struggling with hyperinflation for many years. At one point, he solved this problem by abolishing his own currency and switching to the US dollar. When Zimbabwe introduced a new currency in 2019, inflation quickly exceeded 500 percent. |
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According to Tim Worstall of the British Adam Smith Institute, hyperinflation and the economic crisis in the country are a clear consequence of harmful socialist policies. “They decided to destroy the price system, and then they were shocked to find that it really meant something,” he said.
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“For example, they decided that toilet paper was too expensive. And so they set the price of paper below the cost of production. Which led to the fact that no one produces toilet paper in the country and the country has no toilet paper, “Worstall added.
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Venezuela last changed the value of the bolivar in 2018. In March, it began printing a banknote worth one million bolivars, which became the largest banknote in the country’s history. However, this banknote is now only 0.32 US cents and is not even enough to buy a cup of coffee.
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Since 2008, first under the rule of socialist President Hugo Chávez and then his authoritarian successor, Nicolas Madur, the country has removed eight zeros from its currency due to huge inflation.
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Madura’s last victory in the presidential election is not recognized by the Czech Republic due to falsified results. Since February 4, 2019, the Czech Republic has recognized Madur’s opponent, Juan Guaidó, as president.
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