What Is the Official Currency of Venezuela?
Explore Venezuela's official currency, its complex evolution, and the real-world economic factors influencing its daily use.
The monetary system of Venezuela has undergone significant transformations, reflecting the country’s economic challenges. Understanding the official currency requires looking at its current form and its historical evolution. The everyday financial realities for people in Venezuela also involve currencies beyond the official one, highlighting a complex economic landscape.
The Current Official Currency
The current official currency of Venezuela is the Bolívar Digital, represented by the symbol “Bs.” and the currency code VED. Introduced on October 1, 2021, this re-denomination removed six zeros from the previous Bolívar Soberano. While named “Digital,” it functions as a fiat currency, not a cryptocurrency, and its introduction aimed to simplify financial transactions.
The Central Bank of Venezuela continues to issue physical banknotes alongside the digital format, ensuring both can coexist for transactional needs. The Bolívar Digital’s value is determined by the Venezuelan foreign exchange market system, based on the buying and selling of foreign currencies by individuals and businesses through bank exchange desks. This currency aims to modernize payment systems and reduce transaction costs.
Evolution of Venezuela’s Official Currency
Venezuela’s official currency, the Bolívar, dates back to 1879, when it replaced the Venezolano. For many decades, it was considered a stable currency, even pegged to the U.S. dollar. However, starting in 1983, the currency began a prolonged period of high inflation.
In response to hyperinflation, the Venezuelan Central Bank has implemented several re-denominations. On January 1, 2008, the Bolívar Fuerte (Bs.F) was introduced, removing three zeros from the original Bolívar (1 Bolívar Fuerte = 1,000 old Bolívares). This change aimed to simplify transactions, but hyperinflation continued.
Another re-denomination occurred on August 20, 2018, with the introduction of the Bolívar Soberano (Bs.S), which removed five more zeros. This measure also aimed to combat hyperinflation and streamline currency exchanges. Despite these efforts, the currency’s value remained unstable, leading to the most recent change in 2021. The Bolívar Digital removed an additional six zeros from the Bolívar Soberano. Overall, since 2007, Venezuela has removed fourteen zeros from its currency.
Parallel Currencies and Economic Realities
Beyond the official Bolívar Digital, the U.S. dollar is widely used and often preferred for transactions in Venezuela, a phenomenon known as informal dollarization. This widespread adoption stems from the official currency’s instability and rapid depreciation due to hyperinflation. Hyperinflation has severely devalued the Bolívar, causing prices to change frequently and eroding the value of savings.
Businesses and individuals often find the U.S. dollar more stable and reliable for savings and payments. Many shops and vendors accept U.S. dollars, and some even prefer them, especially for larger purchases. It is common for prices in supermarkets and clothing stores to be marked in dollars. While the Bolívar is still used for small purchases and public transport, the U.S. dollar has become a de facto transactional currency, reflecting a lack of confidence in the local currency. This informal dollarization is a practical response by Venezuelans to cope with economic challenges.