"There's No Cash To Spend" - Elorza Becomes Largest Venezuelan City To Launch "Community Currency"
Content adapted from this Zerohedge.com article : [Source}(https://www.zerohedge.com/news/2018-03-20/theres-no-money-spend-elorza-becomes-largest-venezuelan-city-lauch-its-own)
Venezuela's inflation is forcing the citizens of that country to abandon the bolivar. With an IMF estimated 13,000 percent, the price of things like meat are doubling every month.
This is causing the community of Elorza to issue a currency on its own: the panal.
The panal, which means honeycomb in Spanish, can be spent in just a few stores. But residents of one neighborhood desperate for spending cash said they welcome the idea proposed by pro-government groups.
"There is no cash on the street," said Liset Sanchez, a 36-year-old housewife who plans to use her freshly printed panals to buy rice for her family. "This currency is going to be a great help for us."
Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.
Buying common items such as toilet paper, or paying a taxi driver, requires stacks of the official currency, called the bolivar.
Elorza is the largest Western Venezuela city and the new currency features the face of a local independence leader.
A western Venezuelan city began to issue its own currency this week to alleviate the hyper-inflationary country’s cash crisis.
The “Elorza” currency, with bills featuring the face of local independence leader Jose Andres Elorza, will be valid in the city of Elorza, near Venezuela’s border with Colombia.
The bills are being sold in the municipality’s offices to ensure that thousands of tourists and residents can trade, said mayor Solfreddy Solorzano, a member of the ruling Socialist Party.
Venezuela’s national currency, the bolivar, has plummeted in recent years amid a crippling economic crisis. Prices are doubling nearly every month and basics such as food and medicine are nearly unavailable.
On top of that, there are shortages of cash itself making basic transactions impossible.
“People do not have bolivars to spend, so we created two denominations of notes,” Solorzano said, adding that some 2 billion bolivars’ worth of “Elorza” had been purchased — roughly $9,000 at the black market exchange rate.
Many in Venezuela earn the equivalent of just a dollar or two a month.
The new currency is limited in circulation but it shows how local communities are willing to take matters into their own hands. Localized currency was proposed by Hugo Chavez. The Maduro regime is indifferent to it.
Meanwhile, with the country's next election set for May 20, one of Maduro's opponents, former state governor Henri Falcon, is promising voters a $25 monthly giveaway should he be elected, Reuters reported.
Delivering on such a promise would be, of course, impossible. Venezuela has less than $10 billion in foreign currency reserves. And strict capital controls and US Treasury Department sanctions make foreign currency difficult to come by.
Still, given Maduro's hardball tactics - and the economic lifelines his country has received, and will likely continue to receive, from China and Russia - Falcon can make all the lofty promises he wants.
In a desperate bid to stave off insolvency, Maduro recently launched the Petro - billed as the first government-backed cryptocurrency. It's backed by 5 billion barrels of oil.
Non-adapted content found at zerohedge.com: Source
I feel if former state governor Henri Falcon is promising voters a $25 monthly giveaway should he be elected... then he'll make it pass. He could be having some states which are willing to back him up on this $25 monthly giveaway campaign or maybe he could be having some finances outside Venezuela to support this project.
Inspite of that, the Venezuelan people have no choice but kick Maduro's government out of power when they go to the polls on May 20th.
He has turned he's reign into a dictatorship.. Leading the people into poverty and suffering. The idea of the panal is something I believe is going to overcome the shortages of cash in the community of Elorza. Venezuela will need to use it to fill the gap created by the lack of bolivar notes.
With an IMF estimated 13,000 percent. Imagine, Venezuela sits atop the world's largest oil reserves and they still have this kind of catastrophic problem. This is hard to imagine as a reality. Unfortunately it is. Venezuela’s Central bank printing money like a crazy. Eventualy, when they stop propping up by manipulating the currency it's going to collapse, it already did. Adding another currency doesn’t solve the problem, it will only temporarily patch the wound. The funny thing is that they claim they have no idea what caused this hyperinflation.lol In the end, in my opinion, the best thing that can happen to Venezuela is to formally dollarize its economy, it is currently dollarized in an implicit manner and that would be the root cause of the problem, the issuance of money and price controls. A lot of pain could be avoided for the average person in Venezuela through explicit dollarization.
Good decision in present condition
Unfortunately, it often takes a nightmare crisis for the masses to figure out how to conduct business without rent-seekers calling the shots. Seems like the Venezuelans are beginning to figure things out.
Until when the Venezuelan people will endure the dictatorship of Maduro
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Sounds like the whole country needs help with Cryptocurrency as their new means of earning income and use to trade and buy necessities.
Great dicision
thanks for sharing
According to what i know, the "Panal" is like a token. It is a way to solve the cash-crisis in this country. It would be great that the others citys create it's own "community currency", the national currency cash is not having a good time and it is limited.
Only a few ATM's have cash to withdraw and it gives not really much money, it is hard to get cash. Everybody is paying in points of sale, and the lines to pay are, in most cases, long.
Very interesting article, thanks for sharing.