Breaking the bank

billetes-bolivar-fuerteFrom the department of so-funny-it’s-tragic: La Patilla is quoting anonymous sources inside the Central Bank who claim the government’s printing press is working overtime, so much so that they are having to import the bills just to keep up with demand.

The highlight:

Central Bank of Venezuela (BCV) technical employees spoke to and they claim that “due to high inflation, low-denomination bills are practically not being printed because they literally have no use, given how inflation has eroded purchasing power.

The say that “currently more than 60% of bills in circulation are BsF100 bills (Note: these are the highest denomination bills in the country, roughly US$0.23 at black market rates). The rate of printing has accelerated so much that they have had to hire foreign currency printing companies to make BsF 100 bills, but this costs money and the government owes them, so they are refusing to continue to print unless they get paid.

Off the record, they claimed that “Venezuela’s Banking Association has asked the BCV Board to include higher denomination bills, such as BsF 500 and BsF 1,000, but they refuse.”

So hyper-inflation is causing the printing presses to go into overdrive. This forces the government to import bills and pay for them in expensive foreign currency, meaning the bills in circulation are left with fewer reserves to back them up, thereby feeding hyper-inflation even more. Wash, rinse, repeat. The whole thing is surreal.

By the way, La Patilla, while you’re at it, how about your anonymous sources inside the BCV share the monthly inflation rate? Would be nice… de panas.