22/07/2018 08:09 AST

Venezuela could delay plans to introduce its new currency as banks haven’t received the new bills and quadruple-digit inflation heightens the need for new money, according to people familiar with the matter.

President Nicolas Maduro’s initial redenomination plan called for slashing three zeros from the “Strong Bolivar” notes now in use to be replaced with a new “Sovereign Bolivar”. Originally set for a June roll-out, the president in May then delayed it to August 4. Banks maintain they’ll need some lead time to ensure a smooth transition, according to four people familiar with the situation. A central bank press official declined to comment.

The government is also delaying the operation to consider knocking off more than three zeros from the currency to keep pace with inflation estimated at 60,770 per cent, meaning prices increase about 3.4 per cent every day, according to two people with direct knowledge of the discussions.

Beginning at the end of 2017, the government started ordering more than 4 billion new notes from suppliers including Basingstoke, UK-based De La Rue and Boston, Massachusetts-based Crane Currency, according to central bank documents and a person with direct knowledge of the purchases. While some of the bills have begun to arrive in Venezuela, experts say banks need 20 to 30 days to integrate them into their systems. De La Rue declined to comment while request for comment Crane Currency weren’t immediately returned.

The country’s acute shortage of paper money has added to the misery of Venezuelans, who depend on cash for public transport, gasoline and the purchase of subsided foods. Desperate citizens now pay markups of as much as 200 per cent for paper money in Caracas.

Late President Hugo Chavez took on a similar plan a decade ago, chopping three zeros off the currency and introducing the Strong Bolivar. Since his hand-picked successor, Maduro, took power in 2013, the currency has become virtually worthless amid crashing oil prices and unchecked state spending. In a speech last month, Maduro claimed electronic payments represented 85 per cent of transactions in the country, and would have to rise this year in order to “vaccinate Venezuela” against an attack on “paper money.”

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