Venezuela Is Printing Bigger Bills to Fix Its Struggling Economy

Here’s why it could be only a short-term fix.

By Michael MarksJanuary 18, 2017 12:56 pm|

Venezuela’s economic crisis has created shortages of food, prescription drugs and other necessities. Oil revenues have slowed, and simultaneously, the country’s currency – the bolívar – has undergone historic inflation. Venezuelans require sacks of cash for even simple transactions.

To fix these economic ailments, the government instituted a seemingly simple solution: print cash in larger denominations. To replace the nearly worthless 100 bolívar notes the government is printing new bills with values between 500 and 20,000 bolívars.

David Smilde, a professor at Tulane University and the curator of the blog Venezuelan Politics and Human Rights, says he doesn’t believe this solution will lead to long-term economic stabilization.

“Larger denomination notes will actually facilitate commerce in the short term, but I think actually though it’s going to exacerbate inflation,” Smilde says. “Inflation has a lot to do with perceptions and reinforces the idea that people have that currency is losing its value.”

What you’ll hear in this segment:

– What the effect will be on the day-to-day life of Venezuelans

– Why printing more currency will only be a temporary fix

– How Venezuela might be able to pull itself out of economic turmoil

Written by Morgan O’Hanlon.