Venezuela discontinues the 100-bolivar note

In similar steps to that seen by the Indian government, Venezuela have made the surprise decision to remove the widely used 100-bolivar note out of circulation.  The motives for this also seem to mirror that of India, with the aim to bring a vast amount of unregulated transactions in from the cold. 

Venezuela is a country dogged by a long history of gang culture, something the police have struggled to cope with as gang violence and increased drug use across the country has spiralled out of control.  A large amount of the money that changes hands between user and deal never enters a bank causing a vast amount of unregulated trade.  It’s not surprising this note changes hands so much, with the central bank suggesting there are more than six billion 100-bolivar notes in circulation.  This figure makes up over half the total notes in circulation.

A large proportion of this money has been hoarded by local gangs, and President Nicolas Maduro feels this is a step that will render much of this illegal money useless.  To increase the pressure on gangs, Venezuelans will have 10 days from Wednesday to exchange the notes for coins and new, higher-value bills.

What could this mean for local people?

The move has drawn much criticism from local analysists, with many predicting potential chaos at local banks and cash points.  A lot of people feel the government lack the facilities to make the transition a success, with a backlog of exchanges already building up.  Processing the funds will take some real man power, with some families depositing sizable amounts which require a financial stress test.  The complaint most have made is the timing, with Christmas fast approaching many families will feel the financial strain of losing access to much of their funds.