What Was the Venezuelan Bolivar (VEB)?
VEB was the currency abbreviation for the Venezuelan bolivar, which was the country's currency between 1879 and January 2008. The currency in use from 2008-2018 was the bolivar fuerte (VEF), which translates to "strong bolivar" in English. In 2018, the bolivar soberano replaced the VEF and in 2021, Venezuela issued a new bolivar currency with six fewer zeros to address the country's inflation. Some of the nicknames for the Venezuelan bolivar currency are the bolo and the luca.
- The Venezuelan bolivar (VEB) was the former national currency of Venezuela before being replaced by the bolivar fuente (VEF) in 2008.
- In 2008, the fuente was replaced by the bolivar soberano and in 2021 Venezuela released a new currency with fewer zeros to address the country's inflation.
- Venezuela's currency has experienced periods of instability and hyperinflation due to economic and political troubles that have plagued the country in recent years.
- In 2018, Venezuela's government proposed an oil-backed cryptocurrency known as the petro in response to continued currency weakness.
- Venezuelans primarily use U.S. dollars, euros, bartering, and cryptocurrencies as a means to obtain goods and services.
Understanding the Venezuelan Bolivar
Due to the inflationary devaluation of the VEB, the replacement currency saw funding at a rate of 1000:1. In August 2018, the government further devalued the bolivar by 96%. This action sent a panic through the population as they tried to access funds through ATMs.In October 2021, Venezuela debuted a new currency with six fewer zeros to address the hyperinflation that has made the currency almost worthless.
The Venezuelan bolivar (VEB) was made up of 100 céntimos. This currency initially drew its basis from the silver standard where one bolivar equated to 4.5 grams or 0.1575 ounces of fine silver. The money remained valued on the silver standard until the gold standard came into operation in 1910. In 1934, the bolivar became fixed to the U.S. dollar at a rate of 3.914 bolivar to 1 U.S. dollar.
VEF is currently used as the official Venezuelan currency code, but the use of the VEB symbol is still common in practice. VES is also used as a currency code.
The currency remained very stable compared to others in the region until the 1970s when rampant inflation began to erode its value and forced the change to the new bolivar fuerte (VEF) currency.
VEB and Venezuela's Black Friday
At one time, the Venezuelan bolivar (VEB) was seen as a stable currency. However, a fall in the price of oil and reduced exports damaged the country's currency. By 1983, with a central bank nearly empty of foreign exchange reserves and mounting debt, the president devalued the currency by 100%.
Banks remained closed as the population scrambled to exchange the VEB for U.S. dollars. Known as Venezuela's Black Friday, the government declared insolvency and banned the public from purchasing dollars. Inflation skyrocketed and brought the VEB to its knees, forcing the change to the bolivar fuerte (VEF).
The VEF was somewhat volatile in the global currency exchange market. Much of the VEF’s limitations originated because the Venezuelan government began putting strict controls on their currency in 2003 to limit individuals' access to dollars further.
As inflation continued to devastate the Venezuelan economy, the government and central bank decided to redenominate its currency again. In 2018, the bolivar soberano or sovereign bolivar (VES) replaced the bolivar fuerte.
Due to the high rate of inflation in Venezuela, the demand for U.S. dollars has increased. Without access to the dollar, however, the currency rate can increase with black market activity.
In 2018, due to currency instability, the Venezuelan government announced a proposal for an oil-backed cryptocurrency system to operate alongside paper notes and coins, called the petro. The government claimed that a February 2018 pre-sale of the petro drew in $735 million in investments on the first day.
1 USD is equal to 457,721 VEFs as of Dec. 23, 2021.
A September 2018 Reuters report claimed that the cryptocurrency was yet to take off, much less compete with the traditional monetary system. The publication investigated the coin and found little evidence that it was being used in mainstream society. Others have leveled allegations that the "crypto" isn't even a cryptocurrency nor is it backed by oil or anything else of value.
In 2020, President Mauro aimed to revitalize petro by announcing that all airlines that fly from Caracas internationally must pay for jet fuel in petro. He also said that all state document services must be paid for in petro as well. In general, crypto has taken off in Venezuela outside of petro and many vendors accept cryptocurrencies. The main cryptos used are bitcoin, ether, dash, and eos.
Which Currency Does Venezuela Use?
The currency that Venezuela uses is the bolivar. It is named after Simon Bolivar, the Latin American independence fighter and hero. Throughout its existence, the bolivar has gone through a variety of iterations.
Is Venezuelan Currency Worthless?
Venezuela's currency is a worthless currency. Due to hyperinflation, the currency is hardly used in the country. Instead, citizens use U.S. dollars, euros, cryptocurrencies, and bartering to obtain goods and services. Hyperinflation was caused by the overprinting of the currency as well as large-scale deficit spending.
Did Venezuela Stop Using Bolivars?
Venezuela has not stopped using bolivars but due to the country's hyperinflation, the currency has become worthless. Citizens use other currencies, such as the U.S. dollar and euros as the means to purchase goods and services. The country has also aimed to use cryptocurrencies by establishing its own cryptocurrency, the petro; however, that has failed to gain traction and citizens use other cryptocurrencies, such as bitcoin and ether.