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| Venezuela pulls 100-bolivar note from circulation to 'beat mafia' | Venezuela pulls 100-bolivar note from circulation to 'beat mafia' |
| (about 4 hours later) | |
| The Venezuelan government is to withdraw its largest banknote from circulation in its latest attempt to tackle the world’s worst inflation crisis. | The Venezuelan government is to withdraw its largest banknote from circulation in its latest attempt to tackle the world’s worst inflation crisis. |
| President Nicolás Maduro said on Sunday that the 100-bolivar note, which is currently worth only two US cents (1.6p) on the black market, will be withdrawn on Wednesday. Venezuelans will then have 10 days to exchange the notes at the central bank. | President Nicolás Maduro said on Sunday that the 100-bolivar note, which is currently worth only two US cents (1.6p) on the black market, will be withdrawn on Wednesday. Venezuelans will then have 10 days to exchange the notes at the central bank. |
| Maduro said the surprise move was needed to help stop criminal gangs profiteering on Venezuela’s border with Colombia. “We must keep beating the mafias,” he said. | Maduro said the surprise move was needed to help stop criminal gangs profiteering on Venezuela’s border with Colombia. “We must keep beating the mafias,” he said. |
| His beleaguered government has already announced plans to introduce six larger notes and three new coins from Thursday this week. | His beleaguered government has already announced plans to introduce six larger notes and three new coins from Thursday this week. |
| Critics said the latest move was impractical and would not tackle the root cause of the country’s financial crisis. It also risks prompting a repeat of the chaos witnessed in India when the withdrawal of highest value rupee notes prompted huge queues at banks. | Critics said the latest move was impractical and would not tackle the root cause of the country’s financial crisis. It also risks prompting a repeat of the chaos witnessed in India when the withdrawal of highest value rupee notes prompted huge queues at banks. |
| Writing on Twitter, opposition leader Henrique Capriles said: “When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?” | Writing on Twitter, opposition leader Henrique Capriles said: “When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?” |
| Maduro is facing mounting anger over his handling of the financial and political crisis engulfing Venezuela. In October, officials blocked an attempt to hold a referendum recall of his socialist government. Last month, plans for Vatican-brokered talks were put on hold after officials failed to attend meetings. | Maduro is facing mounting anger over his handling of the financial and political crisis engulfing Venezuela. In October, officials blocked an attempt to hold a referendum recall of his socialist government. Last month, plans for Vatican-brokered talks were put on hold after officials failed to attend meetings. |
| The opposition is seeking to oust Maduro, but authorities vow he will not leave office before his term ends in 2019. | The opposition is seeking to oust Maduro, but authorities vow he will not leave office before his term ends in 2019. |
| Venezuela’s inflation rate is running at an estimated 500% and shortages of food and medicine have pushed the poorest members of its 30 million-strong population to the brink of a humanitarian crisis. | Venezuela’s inflation rate is running at an estimated 500% and shortages of food and medicine have pushed the poorest members of its 30 million-strong population to the brink of a humanitarian crisis. |
| Paying for groceries without a credit card currently requires a rucksack full of cash. And the country’s credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer. | Paying for groceries without a credit card currently requires a rucksack full of cash. And the country’s credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer. |
| Central bank data showed that in November, there were more than 6bn 100-bolivar bills in circulation, 48% of all bills and coins. | Central bank data showed that in November, there were more than 6bn 100-bolivar bills in circulation, 48% of all bills and coins. |
| The oil-producing nation’s currency has fallen 55% against the US dollar on the black market in the past month. | The oil-producing nation’s currency has fallen 55% against the US dollar on the black market in the past month. |
| Maduro has blamed an “economic war” being waged against his government by the opposition and the US. He has also singled out organised crime networks at the Colombia-Venezuela border for buying Venezuelan notes and subsidised Venezuelan goods and then selling them for vast profits in Colombia. | Maduro has blamed an “economic war” being waged against his government by the opposition and the US. He has also singled out organised crime networks at the Colombia-Venezuela border for buying Venezuelan notes and subsidised Venezuelan goods and then selling them for vast profits in Colombia. |
| While profiteering of this sort is an issue at the border, it cannot account for nationwide shortages of the most basic goods from food to medicine, which have left millions of people hungry. | While profiteering of this sort is an issue at the border, it cannot account for nationwide shortages of the most basic goods from food to medicine, which have left millions of people hungry. |
| Strict currency controls introduced in 2003 that pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. | Strict currency controls introduced in 2003 that pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. |
| Maduro’s move could be the latest in a long run of experiments in demonetisation with arguable levels of success. | Maduro’s move could be the latest in a long run of experiments in demonetisation with arguable levels of success. |
| Just over a month ago India’s prime minister Narendra Modi suddenly abolished 500 and 1,000 rupee notes. Like Maduro, Modi said the move was aimed at cracking down on the shadow economy. But it brought India’s cash economy to a virtual standstill. | |
| At a stroke Modi rendered 86% of currency worthless outside a bank branch, forcing millions to queue outside banks to change small amounts of old money for legal tender. | At a stroke Modi rendered 86% of currency worthless outside a bank branch, forcing millions to queue outside banks to change small amounts of old money for legal tender. |
| Queuing for cash is now part of the daily routine, prompting a boom in the queue-sitting business. India’s fractured opposition has united in decrying the move, which is set to key issue in next year’s elections. | Queuing for cash is now part of the daily routine, prompting a boom in the queue-sitting business. India’s fractured opposition has united in decrying the move, which is set to key issue in next year’s elections. |