March 15. Venezuelan President Nicolas Maduro is pressing banks to implement digital payment systems as hyperinflation prompts chronic shortages of cash in the bolivar currency.
With annual inflation hitting 2,665%, long lines form many mornings outside banks in Caracas as residents seek to withdraw a maximum of 400,000 bolivars – the equivalent of 20 U.S. cents – just to pay round trip transit fare to get to work.
Venezuelans have stopped using cash bolivars for food and many other day-to-day purchases. It would take forty bills of 50,000 bolivars to buy 1 kilo (2.2 lb) of rice. Instead, many use U.S. dollars in cash or debit cards – sometimes backed by U.S.-dollar accounts at local banks.
But many poor do not have bank accounts and services like public transit cannot process digital payments.
Maduro’s move is similar to a decision by inflation-stricken Argentina a decade ago to introduce a fare card in the face of coin shortages. He has resisted abandoning the bolivar, instead pushing banks to help more Venezuelans open accounts and obtain debit cards, the financial sector sources said.
Photo: La Republica