Central Bank of Venezuela to announce CBDC in October

The Bank of Venezuela Bankruptcy is expected to announce the CBDC in October, while leading the rate of recovery from major inflation and lowering the face value to 0 6.

From October 1, digital bolivars will begin to develop in the market. The equivalent will consist of 1 new Bolivar coin and 5 to 100 Bolivar banknotes as part of the currency conversion which has been adjusted to zero.

The Central Bank of Venezuela announced the news on August 6. CBDC is equipped with an SMS exchange system to facilitate payment and user exchange. The bank said that the valuation of the CBDC and the currency will not affect the value of the bolivar and that the adjustment is one of the measures to facilitate the use of the bolivar.

"The value of the bolivar will neither rise nor fall," the Venezuelan Central Bank said in a statement.

Venezuelan President Nicolas Maduro first announced the concept of a digital Bolivar in February when he described the CBDC declaration as one of the government's measures to reform and improve the economy.

The president of Venezuela was aware of the numerical advantages announced by Venezuela and in 2018 launched Petro, the oil linked to cryptocurrency as a tool to circumvent US sanctions.

This is the second time in three years that Venezuela has annexed Bolivar. In 2018, when inflation peaked at 1.8 million percent, Maduro lowered the face value of Bolivar from five to zero. The annual rate of increase for Bolivar in 2020 is approximately 2,300%.

Luis Vicente Leon, financial director and director of the Caracas Datanalisis constituency, criticized the decision. The root of the problem is not at all. “If the root of the problem is not resolved, we will be facing the same problem in a few months,” he said.

Venezuela faces long-term economic problems as its economy is affected by US sanctions and rising inflation. In September 2020, Maduro announced a law banning the use of cryptocurrencies as a tool to circumvent US sanctions against Venezuela.