• Infinity Team

Venezuela slashes 5 zero from its currency.

Venezuela issued a new currency Monday in an attempt to bolster its crumbling economy as the International Monetary Fund (IMF) warned that inflation could hit one million percent this year.

The new "Bolivar Soberano" currency is worth 100,000 "old" Bolivares.

The rebranded currency, which has five fewer zeroes than the country's previous currency and will be pegged to a cryptocurrency called the Petro, is intended to simplify transactions.

The government say this will tackle runaway inflation, but critics say it could make the crisis worse. The government made a similar attempt to tackle inflation in 2008, when then-president Hugo Chavez issued new currency that eliminated three zeros. 

Inflation this year could top 1 million per cent, according to economists at the International Monetary Fund

Inflation has made it difficult to find paper money. The largest bill under the outgoing cash system was the 100,000 bolivar note, equal to less than 3 cents on the commonly used black market exchange rate. A cup of coffee costs more than 2 million bolivars. 

A start to the cryptocurrencies

Mr Maduro said he wants to peg wages, prices and pensions to the petro – a cryptocurrency backed by oil reserves and minerals of the country that has the mission to complement the Bolivar whose value falls. He said one petro would equal $60 (£47), with the goal of moving towards a single floating exchange rate in the future tied to the digital currency.

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