Venezuela releases new banknotes in cash crisis

INFLATION-STRICKEN Venezuela has released new banknotes to stop citizens struggling with unwieldy wads of cash. But there’s a problem.

New 500 and 5000-Bolivar notes are pictured in Caracas on January 16. The South American country has the highest inflation rate in the world. Picture: Juan Barreto/AFP

INFLATION-STRICKEN Venezuela released new bigger denomination banknotes Monday to stop citizens struggling with unwieldy wads of cash in an economic crisis.

Customers at banks in Caracas told AFP the cashiers were issuing new 500-, 5,000- and 20,000-bolivar notes.

The notes were meant to be released in December but got delayed, causing chaos as Venezuelans queued up anxiously to change their bills.

President Nicolas Maduro wants to scrap the 100-bolivar note, claiming they are being hoarded by “mafias”. The 100-bolivar note was the highest denomination until now but still only worth a few US cents.

But some in Caracas spoke of problems with the changeover.

“A client came up with several 5,000-bolivar notes to pay for a coffee [costing 150 bolivars]. I told him no. How could I give him change?” Luis Ubillus, running a shop downtown, told AFP.

Automatic cash machines are not yet dispensing the new money because, one bank manager said, they had not yet been programmed to handle the bigger notes.

Socialist Venezuela is considered to have the highest inflation rate in the world, making its smaller banknotes virtually worthless.

The International Monetary Fund forecasts it will soar to a mind-boggling 1,660 per cent this year.

Printing the new banknotes “makes Venezuelans lives easier, but it will not rein in inflation,” economist Anabella Abadi told AFP.

“Coins and bills in the country only represent eight per cent of total liquidity. The greatest pressure is from electronic transactions.”

The opposition blames Maduro for an economic crisis that has sparked riots and looting due to shortages of food and medicine. It wants a popular vote on removing him from office.

Maduro says the crisis is the result of a US-backed capitalist conspiracy.