(Bloomberg) -- Venezuela said it will introduce new large-denomination bolivar notes as hyperinflation renders most bills worthless, forcing citizens to turn to the U.S. dollar for everyday transactions.
The country's central bank posted a statement on its website Friday saying it would begin circulating the new 200,000, 500,000 and 1,000,000 bills to “fulfill the current economy's requirements” without providing further details. The 1,000,000 note -- the largest in the nation's history -- is worth only $0.53 cents.
As Venezuela's economy shrank for a seventh straight year in 2020, the government turned a blind eye to a growing number of dollar transactions, kick-started by rolling power outages that prevented credit and debit card purchases and fostered the use of cash. About 66% of transactions across the country are estimated to be made in foreign currency, according to Ecoanalitica.
While the dollar has gained ground, Venezuelans continue to rely on bolivar bills for public transportation and to purchase subsidized fuel. The Caracas subway recently issued an electronic payment system after it routinely stopped charging passengers due to cash shortages.
President Nicolas Maduro has said he plans to move to a fully digital economy this year, following three years of hyperinflation that have prompted the nation's mint to issue higher-denomination notes that are quickly rendered all but useless. Inflation soared 3,000% in the last 12 months, according to Bloomberg News's Cafe con Leche Index.
In October, Venezuela imported banknote paper with plans to issue a 100,000 bill that quickly became outdated. It last issued new bills in 2019, after chopping five zeros of the previous bills in circulation in 2018.
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