Could Venezuela have a CBDC?
All the attention is currently on Nigeria and its recent announcement of the eNaira, the African country's new CBDC created to boost monetary sovereignty and boost the strength of a currency that had lately been losing a lot of ground to the dollar.
On leofinance, they have been talking about this, but BadBitch's post on the eNaira was the one I liked the most, as it touches on real points about what can happen with the implementation of a CBDC, and talked about the results of this and will be the same, as they are taking a weak and dying currency into a hybrid system that is doomed to fail.
Now, many countries that are also seeing this new incrustation of the traditional economy to a digital economy, are also wondering if they could do the same, and one of those countries that could be candidates to have a CBDC is Venezuela, since it suffers the same problem as Nigeria but much more aggravated and just like the African country, Venezuela is looking for quick and effective solutions, that is why they can consider a CBDC as the solution.
Venezuela is a country in a constant crisis that in the last 10 years has worsened to a point where the bolivar is worth absolutely nothing, at the beginning of this month there was a monetary reconversion to try to make up for the crisis since inflation is destroying the Venezuelan economy. The reconversion removed 6 zeros from the Venezuelan currency, but previously 8 zeros had been removed in other reconversions. In addition, another problem in Venezuela was the acute shortage of cash, and since it is a country that depends heavily on cash, there was an aggravated crisis because of that.
So the Venezuelan government to solve the problem of inflation and high cash, made the reconversion and implemented a policy of greater use of digital currency through bank transfers, instant P2P payments, among other ways. And these changes in the monetary policy have had a moderately positive impact as inflation has decreased and the population is adapting to payments through digital channels.
Is it possible to see a CBDC in Venezuela?
Although in Venezuela everything is being prepared to have a 100% digital economy like in Sweden, the truth is that there is not the necessary platform for the creation of a stable CBDC.
For example, there is the problem of the necessary education, since the vast majority of the population does not know about cryptocurrencies or they are afraid of it because they consider it insecure, also the necessary platform for a successful CBDC is out of reach since Venezuela constantly suffers electrical problems due to the great deterioration of the infrastructure, also the constant problems with the internet and the lack of necessary technology make Venezuela an unlikely place to have a CBDC.
Finally, there is the factor of knowledge about cryptocurrencies. Since the Venezuelan government failed miserably in the creation of a state cryptocurrency, the Petro, today is a project that only the government knows about and uses, but there is no free buying and selling for everyone since it is controlled by the government. So if they launch a CBDC the vast majority of people would not have much confidence in it.
However, the sector of cryptocurrencies is growing every day in Venezuela, and although it still lacks the necessary education to properly promote the use, people are adapting to them to cover their daily needs.
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