News Americas, NEW YORK, NY, Fri. May 18, 2018: Venezuelans have come up with an unusual solution to the country’s hyperinflation by printing their own local currencies instead of relying on the national currency, the Bolivar, which has lost almost all its value.
Venezuela’s inflation has spiraled to nearly 14,000 percent this year, making a simple trip to the grocery store an odyssey for common Venezuelans.
Creating local currencies has become an appealing option that keeps daily consumption afloat in many communities as the Bolivar keeps devaluating.
The city government of the Venezuelan capital Caracas, for example, has launched a local trading paper called Caribe.
“I am paying with this new little note. It’s exactly as if I was paying with normal cash, and it’s economical and easy,” said Andreina Morales, a Caracas resident who shopped by using Caribe at a local market.
The Caribe banknotes now serve as a practical and convenient solution to local residents’ cash crunch.
“These trading notes, backed by the City Hall’s own bank, allow us to get some liquidity back and have some cash available for shopping,” said Barwill Gonzalez, an official with the Caracas City Hall’s Markets and Supply Division.
The Caracas city government is not alone.
In the Panal 2021 community located west of the capital, around 10,000 people now trade in Panales, another local currency that was launched in December last year.
The Panal 2021 has its own local bank, BanPanal, which is responsible for printing and dispensing the local banknotes.
Although it is lawful for local authorities in Venezuela to create their own currencies, challenges and risks remain since local governments do not have the capacity to fight counterfeiting as a central bank does, experts warned.
“As these mechanisms are not managed by an authority that can somehow guarantee what is being printed, they are very prone to corruption, very prone to fraud,” said Luis Zambrano, an economics professor at the Andres Bello Catholic University.
Some worry that local currencies might only be a short-term solution since the country’s hyperinflation is expected to continue deteriorating. (SOURCE: CCTV)