Venezuelan Central Bank Discussing Dollarization Plan with Local Banks
Posted on November 16th, 2020 by Kyle Torpey and filed under Fiat Collapse.
According to Bloomberg, at least five different banks in Venezuela have met with central bank officials to discuss dollarization. Specifically, the Venezuelan central bank is interested in implementing a new, domestic clearing system for U.S. dollars by the middle of 2021.The plan would also allow local financial institutions to offer loans denominated in U.S. dollars.
U.S. dollars are a popular alternative to the Venezuelan bolivar inside of Venezuela due to the bolivar’s annual inflation rate, which Bloomberg estimates at 5,400%. Recently, Bloombergreported on the use of the United States-based money transfer application Zelle by Venezuelans domestically.
The fact that Venezuela’s local currency has become worthless helps with the sales pitch for bitcoin as a global, apolitical store of value. It’s likely that dollarization in Venezuela would harm the attractiveness of bitcoin in the country, at least over the short term.
Kyle is the creator of The Crypto Feed. Before founding The Crypto Feed, Kyle was a longtime freelance Bitcoin writer at places like Forbes and Bitcoin Magazine.