The South American country will launch its CBDC within the next months

Venezuela has confirmed that it will be launching a digital currency version of its bolivar in October, according to Bloomberg. The move comes just a few months after El Salvador announced it was adopting Bitcoin as legal tender. Venezuela’s President Nicolas Maduro has endured a difficult economic period over the past four years. The country has experienced a lot of runaway inflation. This has led to the adoption of several policies.

Bloomberg reports that the country will drop six zeros from the bolivar to save the currency “that has been wracked by years of hyperinflation“. The US dollar was adopted by the government at one time to quell the problem. Following the announcement of currency redenomination, the launch of a CBDC was also announced.

The Central Bank of Venezuela will oversee an SMS-based exchange system that will facilitate the adoption of the digital currency dubbed ‘Bolivar Digital.’ According to Bloomberg, the new bills will be printed by central bank and put into circulation on the first of October. Although most Venezuelans prefer the dollar, it is important to note that the bolivar is still used by Venezuelans for simple transactions.

The bank encouraged Venezuelans not to ignore the digital currency but to use it for their daily transactions. The CBDC was introduced by the country to combat inflation. Six zeros were also removed from the currency.

Not all people see the decision as a positive. Some people believe that dropping zeros is a temporary fix. They are not unreasonable considering that similar changes were made in the past. The bank answered any doubts about the impact of these changes by stating that they would not affect the bolivar’s value.

” The bolivar won’t be worth more or less. To make it easier to use, it is being transferred to a simpler monetary scheme ,”, the bank stated.

The idea of a digital currency first surfaced in February when President Maduro tipped it as a potential approach to better the country’s economy. This wasn’t the first instance that the President had used digital currencies. To evade US sanctions, he had already created the Petro coin, which is a digital currency that is reportedly tied to Venezuela’s oil reserves. Maduro suggested last year that cryptocurrency be adopted to bypass US sanctions.