December 19th, 2016
Before November 8, 2016, demonetisation as a word as well as the phenomenon, was not known to a majority of Indians. A month later, we are all a part this of this historical journey India is going through. Of course, it is ‘historical’, seeing the daily dossiers of arguments and counter-arguments for and against demonetization, which are doing the rounds in media. While the promised utopia of a black money-free economy is far from reach as we are approaching the said 50-day limit, the death toll, however, has exceeded 120.
Following the footsteps of India, Venezuela also adopted demonetization, but it turned out to be catastrophic. The president of the country Nicolas Maduro on December 11, signed an emergency decree ordering the country’s largest banknote, 100 Bolivar bill, to be illegal tender within 72 hours. This was a step to curb the hoarding of cash by international “mafia”. Maduro says they are “accomplices in the plot,” to “destabilise” the economy and that they are led by an NGO “contracted by the US Department of Treasury.”
Venezuela’s economic crisis
The decision came as a major surprise to the people as the country is amidst of a great economic crisis with the world’s highest inflation. The 100 Bolivar is the most valuable note in circulation, accounting for 77% of the nation’s cash. At the highest official rate, this 100 Bolivar note is worth about 15 US cents. He declared that new bank notes of 20,000 Bolivars (200 times greater than 100 bolivars) would be issued.
The retirees complained that their pensions were already paid in lower 50- and 20-Bolivar denominations.
Oppositions went to say that Maduro is destroying Venezuela’s economy. IMF has projected that the country would have an inflation rate of 475%. The nation is reeling under runaway prices and has shortages of essential amenities.
Effect of the Announcement
Soon after demonetization hit the country, the angry citizens started protesting. Venezuela already has the highest criminal record in the world. And people were plundering shops on Friday in several provinces after they began to face the cash crunch. The reason being that the promised higher denomination bills had not reached the banks and ATMs. This economic woe is a week before Christmas and the beginning of the holiday season.
Security forces have so far detained over 300 people during the protests and looting. The police had to use teargas to control crowds in some places.
After two days of unrest including one death, Maduro on Saturday announced that the measure would be postponed until 2 January 2017. In spite of the recall, many businesses were still refusing to trade with the 100 Bolivar notes on Sunday.
Maduro also hoped, like India’s Prime Minister Narendra Modi, to make his country’s economy digital as much as possible. But, the reality is quite different. Nearly 40% of Venezuela’s people do not have bank accounts.