Venezuela plans to remove five zeros from its national currency in order to combat inflation
In a drastic attempt to combat inflation, Venezuela wants to remove five zeros from the national currency unit, bolivar. It is not going well with the Venezuelan economy, especially since the crash of the oil prices in 2014. According to Ivo Arnold, Professor of Monetary Economics at Erasmus School of Economics, the government wants to show the population that they are doing something about the problem. ‘However, only taking off the zeros is symptom treatment, which does not help.’
According to Arnold, the amount zeros is not the problem. ‘That is hunger, poverty, lack of medicines and food and an increase in crime. Hyperinflation is quite rare and it is caused by the most severe form of economic mismanagement.’
The money is now so little worth that eggs are seen as a serious substitute for the currency. Arnold does not find it strange that the population seeks refuge in such exchange methods. ‘When the coin is so worthless, people will avoid it of their own accord. The alternative is very imperfect and quite tragic.’ Eggs can break, they have a limited shelf life and are not regulated as means of payment.