Friday, December 16, 2016

Venezuela’s lunatic experiment in demonetisation

Nonetheless, on December 11th Mr Maduro announced that the 100-bolívar note would cease to be legal tender within 72 hours. It is the most valuable note in circulation, accounting for 77% of the nation’s cash. (On the black market, it is worth three American cents.) The government says people can deposit the old notes in banks and they will be replaced with new ones in denominations as high as 20,000 bolívars. Eventually.

Massive queues—of ordinary people who use cash to survive—quickly formed outside banks. They brought boxes of old banknotes and waited hours to deposit them. Venezuela is one of the most crime-ridden countries on Earth but few muggers bothered to rob people of their soon-to-be-worthless cash. Tempers frayed, however, and fights broke out. “It’s an abuse,” says one disgruntled queuer after standing two hours in a line at a Caracas shopping mall to pay in the equivalent of less than $20. “The government deliberately wastes our time,” grumbles Bianca Manrique, a doctor ....