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HomeWorldVenezuela Follows India’s Example and Voids Half of its Cash

Venezuela Follows India’s Example and Voids Half of its Cash

CARACAS, Venezuela—Venezuela is taking nearly half the country’s bank notes out of circulation beginning Wednesday, threatening to ruin the holidays season for Venezuelans already suffering from dire cash shortages, hyperinflation and an economic meltdown.

The country’s largest bill, worth 100 bolivars or just 3 U.S. cents on the black market, is to become illegal, in a move designed to combat contraband along Venezuela’s borders, the government said.

President Nicolás Maduro said outlawing the notes would destroy what he claims are Colombian smuggling mafias that hoard bolivars to buy price-controlled food and gasoline in Venezuela, which is then resold at a markup. Mr. Maduro said Monday night he was closing the Colombian border until Thursday night to prevent stacks of bolivars from making it back to the country.

Buying a kilogram of tomatoes already requires a stack of at least 32 100-bolivar bills in Venezuela, where banks and credit-card terminals are scarce outside state capitals and ATMs give out a maximum of $2 a day in the national currency, the bolivar. Now it will take at least twice that many.

Venezuelans have just two days to deposit into banks the more than six billion targeted bills currently in circulation. Anyone wanting to exchange the worthless bills after that will have 10 days to submit them at the central bank after being questioned by the secret police, Mr. Maduro said in an unexpected announcement on Sunday.

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(via WSJ)