
Venezuela Follows India’s Example and Voids Half of Its Cash - ryan_j_naughton
http://blogs.wsj.com/indiarealtime/2016/12/13/venezuela-follows-indias-example-and-voids-half-of-its-cash/
======
firekvz
I really can't understand how this article misses entirely the actual news
here

"Venezuela is issuing a full new set of notes and is replacing 100 VEF bills
(the biggest we had) for a coin"

So far we had this (in VEF):

\- Coins for: 0.05, 0.1, 0.125, 0.5 and 1

\- Bills for: 2, 5, 10, 20, 50 and 100

now we will have (in VEF):

\- Coins for: 10, 20, 50 and 100

\- Bills for: 500, 1.000, 2.000, 5.000, 10.000 and 20.000

So thats about it, the gov is finally accepting that we have a huge inflation
and the old bank notes can't be used any more (in terms of convenience) so
they are exchanging our current biggest bank note of 100 for other sizes but
is nowhere mentioned in the article

Of course all the previous bank notes (from the old set) are being banned
because they are being taking out of circulation mostly because the DESING IS
THE SAME (just a recolore) and can cause confusions, here you can see a
comparation:

\- old desing: [http://runrun.es/wp-content/uploads/2013/10/venezuela-
boliva...](http://runrun.es/wp-content/uploads/2013/10/venezuela-bolivar-
fuerte.jpg)

\- new desing: [http://imgs.globovision.com/2Io-ZrCgwYEjgOw-
dGsi6ndh1WM=/700...](http://imgs.globovision.com/2Io-ZrCgwYEjgOw-
dGsi6ndh1WM=/700x0/smart/e3ccb1d95ed74a8a919e4bec4f0c2375)

In resume this is actual good news for venezuelans because even tho we still
suffer all the problems we have, at least we get to avoid carrying 1 kilo of
100 VEF notes to make a purchase, we can just pay with 1 20.000 bill.

~~~
gus_massa
Hi from Argentina. We change money every 10-15 years, so we are use to strange
things.

This is very strange. When we change money we usually have a longer period
while both kind of bills are valid.

For example, now we have two designs of the ARG$100(US$7) and ARG$50(US$3.5)
for political reasons and two designs of the ARG$10(US$0.7) for security
reasons. They are used together and the ATM can provide any of them at random.
The two ARG$100(US$7) bills have coexisted since 2013 and there is no problem.

We also have ARG$2(US$0.15) bills and coins since 2011 without problem.
Actually all the ARG$2(US$0.15) bills are very old and not very well
conserved, so you must treat them carefully to not destroy them, but you still
can use them.

So it's very fishy that they are forcing to put all the bill in the bank with
a in a extremely short time. I suspect something shady like a Corralito, but I
still can't discard plain stupidity. (
[https://en.wikipedia.org/wiki/Corralito](https://en.wikipedia.org/wiki/Corralito)
)

~~~
rafaelm
According to the government, this was done as a surprise measure to stop the
mafias taking the bills to Colombia as part of the "Economic Warfare" (that
convenient excuse for our failed economy) that is being waged against
Venezuela.

Lots of people are talking about a Corralito here. The people exchanging their
bank notes in the Central Bank in Caracas are only receiving a voucher saying
that they deposited their money there!

Those that cannot make the trip to Caracas or don't have access to a bank or
bank account are basically screwed.

There is a theory that since the dollar black market rate was increasing every
day, the government did this as a way to collect all that money in the streets
as a way to stop it.

The government insists on blaming all our problems on external factors, it's
never their fault. But no one ever thinks if it would actually be possible for
an "evil actor" to influence the economy of an entire country via twitter or
mafias, like they constantly say.

------
azov
USSR did a similar reform in 1991, so called Pavlov Reform. There were three
days to exchange 100 RUR bills (the largest bill in circulation) _and_ there
was a limit on how much one could exchange.

[https://en.m.wikipedia.org/wiki/Monetary_reform_in_the_Sovie...](https://en.m.wikipedia.org/wiki/Monetary_reform_in_the_Soviet_Union,_1991)

------
grabcocque
So far Venezuela continues to follow the hyperinflation playbook with
depressing obedience.

------
dingo_bat
I don't think there is any similarity between the two events. The reasons are
entirely different. The time has coincided somewhat.

------
prashnts
Few points of comparison from India [1]

\- Population: 30.8 million vs 1.29 billion

\- Internet usage: 61.87% vs 26% of population

\- GDP: $371.3 billion vs $2.074 trillion

I think it's far easier/achievable by Venezuela to implement than it has been
for India.

[1]
[https://www.wolframalpha.com/input/?i=venezuela+vs+india](https://www.wolframalpha.com/input/?i=venezuela+vs+india)

~~~
aub3bhat
I think you are way off and quoting meaningless number without having any
clue. What does Internet usage or Population has to do with an economic move?

There is only one number that matters and its inflation 500% as of April 2016.
Venezuela is suffering from hyperinflation and scarcity.

[http://money.cnn.com/2016/04/12/news/economy/venezuela-
imf-e...](http://money.cnn.com/2016/04/12/news/economy/venezuela-imf-economy/)

India on other hand is going through a period of robust growth, with inflation
well within limits. Even the worst projection show that the demonetisation
will reduce india's growth rate from 6% to 4% for at most couple of quarters.
4% is still considered quite a good growth rate.

Actually the worst phase of demonetisation is already over. In 30 days
everything will be back to normal.

~~~
kranner
> Actually the worst phase of demonetisation is already over. In 30 days
> everything will be back to normal.

Even the government doesn't think things will be back to normal in 30 days.
According to the finance minister, it will take 1-2 quarters.

[http://www.businessinsider.in/Effect-of-demonetisation-
will-...](http://www.businessinsider.in/Effect-of-demonetisation-will-remain-
for-one-or-two-quarters-Jaitley/articleshow/55726173.cms)

~~~
tmbsundar
The "worst phase" that is, not "the effect". I think the OP meant the "cash
crunch / unavailability of 500 INR notes/ ATMS running out of cash etc.,".

The effect may take at least a quarter to ease down.

[1]
[http://www.deccanchronicle.com/business/economy/161216/cash-...](http://www.deccanchronicle.com/business/economy/161216/cash-
crunch-to-end-by-mid-january-says-amitabh-kant.html)

~~~
kranner
NITI Aayog is a government mouthpiece and not any kind of credible source on
this topic. So far there is no sign of the worst of the cash crunch being over
esp. in the Northern states.

And I'm pretty sure GP said "everything" will be back to normal in 30 days,
not just the cash crunch.

~~~
tmbsundar
> NITI Aayog is a government mouthpiece and not any kind of credible source on
> this topic.

I don't think you can brush aside broadly like that. You may have your own
reasons not to believe them. Can't say can't believe them. Have to wait and
watch

> And I'm pretty sure GP said "everything" will be back to normal in 30 days,
> not just the cash crunch.

I admit my interpretation was different and may be wrong what OP said. Only he
can confirm what he meant :-).

------
future1979
I'm very sorry for the common folks in Venezuela. Can anyone shed light on how
life goes on in these situations? It seems that basically all ones savings
would get wiped out. A reasonable first response for those with cash would be
to buy physical assets - property, cows, cars, etc. But why would anyone sell
those?

------
sctb
Related discussion:
[https://news.ycombinator.com/item?id=13196150](https://news.ycombinator.com/item?id=13196150)

------
jestinjoy1
God save people of Venezuela. From India.

------
edblarney
"our media is intervened by the goverment."

This is not true at all.

There is some relationship between press and gov. but Barack Obama is in no
way censoring CNN, Fox form publishing stories about bank robberies.

The 'real reason' that they don't is because their readership just does not
care.

Fox News has been bashing Venezuela for years, it's crazy to suggest 'the
government' is suppressing them from publishing negative stories about
Venezuela.

That said - I personally wish there was more coverage.

~~~
thnnb
Dude what are you on, I want some. Obama, CNN, Fox and the whole US are on
topic as much as the Lochness monster.

~~~
edblarney
They are 'on' subjects people care about enough to click.

Nobody cares about the specifics of Venezuelan currency exchange. So they
don't cover it.

It's absurd to suggest they are 'not covering it' because the US government is
intervening on that issue. Totally absurd.

Canada is the US #1 trading partner, and how much coverage do you see about
Canada? None. We have a new Prime Minister and it barely makes the news. We
have major trade disputes on going - zero coverage. Because nobody cares.

Trump, Taylor Swift, the current SJW meme, and the last 'shooting' and
whatever is trending on Twitter is what they cover.

There is a war going on in Mosul, Americans involved, and since the start of
that action there's been zero coverage.

It's because people don't care enough. That's it. There's no conspiracy.

You want details on Mosul go to AlJazeera. You want details on Canada go to
the CBC. etc.

~~~
thnnb
When I said "our media is intervened by the government" I meant -local- media
in Venezuela, under direct influence of Venezuela's government. Local TV
channels (Globovisión, Televen, VTV...), local newspapers, local radio
stations, etc. I do get the point that US media doesn't cover our stories in
detail because US audiences aren't that interested, I just don't understand
why you keep pointing that out in this context.

~~~
edblarney
Oh, I see. _Venezuelan_ media is controlled - sure.

My bad, I guess - but it's really not clear from that post that you're
referring to the Venezuelan press, as opposed to the US press. When you say
'our press' I didn't know you meant 'Venezuelan' , most people are not
familiar with the acronym you used there on the first line. I assumed it was
American, actually.

------
ksjdj
Classy governments do this slowly over a long period of time.

------
partycoder
Rather than voiding it, they force it out of circulation by giving a deadline
that requires people to deposit it in a bank.

~~~
jimmywanger
> they force it out of circulation by giving a deadline that requires people
> to deposit it in a bank.

Do you know what circulation means in this context? If the money is in a bank,
it's still in circulation, you can use your ATM card to pay for stuff with it.
You just don't have the bill on you, but the money is still floating around.

------
known
Adopt US dollar as your national currency; Here are all the countries that
does it; [http://qz.com/260980/meet-the-countries-that-dont-use-
their-...](http://qz.com/260980/meet-the-countries-that-dont-use-their-own-
currency/)

~~~
geofft
Are there countries that peg their currencies to combinations of other
countries' currencies, mutual-fund-style, so you're not dependent on one
single country's economy and politics remaining stable? I'd imagine that
pegging your currency to, say, a linear combination of the UN Security Council
members' currencies, weighted to get you about equal purchasing power on each
currency, would be a good way to hedge risk.

(Or is there a some economic reason this is a terrible idea?)

~~~
twelvechairs
China has done this. It has been pegged to a (somewhat secretive) basket of
foreign currencies for some time. Before that it was pegged to USD.

~~~
jaza
That's right. Pegging a currency does of course have its advantages and
disadvantages - in China's case, it's worked out very well for their economy
(and for some groups of people in China, though certainly not for everyone).

[https://en.wikipedia.org/wiki/Renminbi](https://en.wikipedia.org/wiki/Renminbi)

