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Venezuelans fight to protect their savings as government pulls bills from circulation
Fusion
by Manuel Rueda and Mariana Zuñiga
12/13/2016
Excerpts:
CARACAS— Venezuelans are rushing to the banks this week in a desperate attempt to protect their savings from the government’s latest spasm of reckless financial policymaking.
On Tuesday morning thousands of people across Venezuela played hooky from work to line-up outside banks and deposit bundles of cash into their savings accounts after the government gave everyone a 72-hour countdown to turn in all their 100 bolivar notes before they’re removed from circulation.
“I’ve been saving for so long, withdrawing money every week and for what? Nothing!” complained José Orozco, who was holding a backpack full of money as he stood in line.
The 100 bolivar note, the highest denomination of Venezuelan currency, is currently worth about 3 cents on the U.S. dollar. But Venezuela’s government announced on Sunday that it is removing the bills from circulating because they’re being purchased in bulk by “international mafia groups” that are allegedly trying to “overthrow” the struggling socialist government by hoarding money abroad and starving Venezuela of cash.
President Nicolas Maduro said that by making his country’s 100 bill illegal, he is “hitting back” against the mafia groups, who he claims have ties to the U.S. State Department, although he’s never offered any solid proof to back his claims.
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But not many people believe Maduro’s narrative about withdrawing the currency to fight the mafia. Juan Nagel, a Venezuelan economics professor and co-founder of the Caracas Chronicles blog, described the government’s story as a “wacky” conspiracy theory.
“If the mafias wanted to attack the currency supply, why didn’t they buy (cheaper) lower denomination bills,” Nagel said. “And why didn’t the government withdraw those bills, too?”
Nagel, who teaches at the University of Los Andes in Chile, said a more likely reason that the 100 bolivar bills have come in short supply is because of Venezuela’s hyperinflation. For example, a simple lunch in Caracas right now currently costs around 5,000 bolivares, which means that if someone wants to pay for the meal in cash, they have to fork over a thick wad of 50 bills.
Economists say another likely reason for Venezuela’s cash shortages is that people are taking their increasingly worthless money to the border to trade it for dollars to buy essential goods. In Cucuta, a city on the Colombian border, hundreds of exchange houses buy bolivares from Venezuelans who cross into the neighboring country looking for shampoo, rice, flour and other goods that have become scarce in Venezuela thanks to the country´s rigid price controls.
Now the exchange houses have 72 hours to figure out what they are going to do with boxes full of 100 bolivar notes on the wrong side of a border that’s been closed by Venezuelan officials.
“This is an authoritarian measure. Another case of the government trampling our rights,” said Diego Olarte, a spokesman for Cucuta’s money changers.
Back in Caracas, people lined up outside banks carrying plastic bags and backpacks stuffed with 100 bolivar bills to deposit into their accounts and convert into digital savings before the clock ticks down to zero.
View the complete article, including image and videos, at:
http://fusion.net/story/375649/venez...m-circulation/
Fusion
by Manuel Rueda and Mariana Zuñiga
12/13/2016
Excerpts:
CARACAS— Venezuelans are rushing to the banks this week in a desperate attempt to protect their savings from the government’s latest spasm of reckless financial policymaking.
On Tuesday morning thousands of people across Venezuela played hooky from work to line-up outside banks and deposit bundles of cash into their savings accounts after the government gave everyone a 72-hour countdown to turn in all their 100 bolivar notes before they’re removed from circulation.
“I’ve been saving for so long, withdrawing money every week and for what? Nothing!” complained José Orozco, who was holding a backpack full of money as he stood in line.
The 100 bolivar note, the highest denomination of Venezuelan currency, is currently worth about 3 cents on the U.S. dollar. But Venezuela’s government announced on Sunday that it is removing the bills from circulating because they’re being purchased in bulk by “international mafia groups” that are allegedly trying to “overthrow” the struggling socialist government by hoarding money abroad and starving Venezuela of cash.
President Nicolas Maduro said that by making his country’s 100 bill illegal, he is “hitting back” against the mafia groups, who he claims have ties to the U.S. State Department, although he’s never offered any solid proof to back his claims.
..............................................
But not many people believe Maduro’s narrative about withdrawing the currency to fight the mafia. Juan Nagel, a Venezuelan economics professor and co-founder of the Caracas Chronicles blog, described the government’s story as a “wacky” conspiracy theory.
“If the mafias wanted to attack the currency supply, why didn’t they buy (cheaper) lower denomination bills,” Nagel said. “And why didn’t the government withdraw those bills, too?”
Nagel, who teaches at the University of Los Andes in Chile, said a more likely reason that the 100 bolivar bills have come in short supply is because of Venezuela’s hyperinflation. For example, a simple lunch in Caracas right now currently costs around 5,000 bolivares, which means that if someone wants to pay for the meal in cash, they have to fork over a thick wad of 50 bills.
Economists say another likely reason for Venezuela’s cash shortages is that people are taking their increasingly worthless money to the border to trade it for dollars to buy essential goods. In Cucuta, a city on the Colombian border, hundreds of exchange houses buy bolivares from Venezuelans who cross into the neighboring country looking for shampoo, rice, flour and other goods that have become scarce in Venezuela thanks to the country´s rigid price controls.
Now the exchange houses have 72 hours to figure out what they are going to do with boxes full of 100 bolivar notes on the wrong side of a border that’s been closed by Venezuelan officials.
“This is an authoritarian measure. Another case of the government trampling our rights,” said Diego Olarte, a spokesman for Cucuta’s money changers.
Back in Caracas, people lined up outside banks carrying plastic bags and backpacks stuffed with 100 bolivar bills to deposit into their accounts and convert into digital savings before the clock ticks down to zero.
View the complete article, including image and videos, at:
http://fusion.net/story/375649/venez...m-circulation/