The shortage of cash is another of the problems that Venezuelans we have in the midst of the most intense economic crisis we have experienced. get bills to pay for public transport, parking or buying food, requires investing hours of waiting at banks or ATMs and even paying up to 400% of surcharge for them.
Buying in cash has become a way to get the cheapest products, from a coffee to a ticket to travel. In addition, the digital platforms of the banks work at full speed, exhausting their systems, which in many cases fail due to the unprecedented amount of transactions.
How did the country reach that point?
The government assures that there is a conspiracy against the Venezuelan currency that is directed from abroad. Colombia is designated as the epicenter where the bolívar banknotes are taken, he did not, however, explain why smugglers would covet nearly worthless banknotes.
In Venezuela we have more liquidity or more money in circulation than the productive capacity or production in national goods and services. This means that when the economically active population is brought together with the private sector and the public sector and you put them all to work, the amount of goods generated is lower than the amount of money that represents in the market here we would have to talk about a very particular phenomenon that is the phenomenon of organic money and inorganic money
Organic money is that money that is the result of commercial activities of financial exchange, buying and selling activities and bank deposits is the money that is created by productive activities.
Inorganic money is the money printed by the central bank without being backed by production, nor the amount of gold or reserves that the country has. but it is a decision making of the monetary authority or central bank to place it in the banking system without any kind of support. doing this generates inflation since there is more money in the market than production, hurting the price system.
Where are the bills?
Another reason why cash is scarce is that faced with this same phenomenon, people and companies begin to reserve it and do not deposit it in banks. Since last year there is an unofficial limitation that restricts the amount of cash that can be withdrawn at the ticket offices and ATMs. In the case of the latter the limit is Bs 100,000, daily in most cases is less, while in a banking agency depends on availability. Recall that the Central Bank of Venezuela has the monopoly of primary issuer of money in the economy and is the only one authorized to deliver coins and bills to the bank.
Another reason why cash does not come back to banks is that it has become a commodity. Smugglers and money resellers retain high sums for use as a product.
Thus, obtaining Bs 1,000,000 in cash can cost another Bs 4,000,000, with which the cash trader makes a profit of 400% on the bills. Here in Venezuela selling cash is a business.
And the new banknotes?
The government put into circulation in January 2017 a new group of bills with denominations from Bs 500 to Bs 20,000. In November of that same year the Bs 100,000 began to circulate. However, both the quantity and its distribution among the denominations collided with inflation, making them insufficient to meet the demand for cash. These bills are already devalued in just one year and without even being all in circulation on a regular basis the new notes have not replaced the previous ones. The capacity of production and importation of banknotes fell short of inflation caused by the government. That is, instead of producing more or borrowing, the Executive asks the BCV to create money to cover its expenses, and that is one of the main causes of inflation in Venezuela.
t happens that the government knows that it does not have enough banknotes and try to generate a tax incentive so that people can pay electronically with a three point tax reduction if you make payments with electronic cards instead of using cash.
we have the other bottleneck the national banking network at the level of telecommunications and systems the debit points is not efficient enough to be fast, transparent, effective and absorb all the people who are making electronic payments because they do not have cash. Also In Venezuela there is a phenomenon of the two hours of queue, three hours of queue in a market to pay something exaggeratedly silly but as you need it you have to be there wasting valuable time.
then, we have bottlenecks in the payment with electronic debit points for the entire national banking network, absence of banknotes due to the inability to generate the largest amount to cover the demand of the people, fiscal incentives that are not necessarily generating increases in electronic payments and evidently a distribution network of goods and services trade sector that is not fully adequate alternative means of payment because it must also be seen that in this situation in Venezuela have created opportunities for many entrepreneurs who have created a means of alternative payment under the peer to peer ways using smartphones and the interbank network and the banks themselves have created their own applications in the markets of the applications either of Android and ios for the telephones and the people have lowered it and have used this as if it were an SMS text message to be able to pay from one phone to the other phone, and this was an initiative of the bank superintendency, a little depending on the lack of cash to use the technology to get out of this pitfall however the issue is that not everyone feels trust with those systems, besides not all They have a smart phone and the one who has it is not willing to use it everywhere due to insecurity. I hope that my explanation helps them to understand a little the situation that we live in my country.