Venezuela has ordered severe limits on bank withdrawals less than a week after India made changes to its cash currency precipitating long lines at the nation’s ATMs. Both of these government actions have led to an increase in interest on the digital currency, Bitcoin.
Venezuela’s Superintendency of Banking Sector Institutions (Sudeban) forbade public and private banks from dispensing more than US $5.26 per day cash from branches or ATMs.
Sudeban allows a maximum of four transactions allowing the withdrawal of up to approximately US $5. In the midst of crisis, Venezuela’s inflation has reached more than 750 percent and is expected to go much higher. Cash is a necessity because of the inflation, but now the cash cannot be withdrawn, and Venezuelans suspect the government is trying to avert a bankruptcy. The Central Bank of Venezuela promised new banknotes beginning December 15, but has imitated this will be a slow process.
The currency crisis has led to Bitcoiners in the country to start discussing the virtues of a bolivar that can be exchanged in a decentralized way on online Bitcoin forums.
The ATM withdrawals in Venezuela led to an increase in the Bitcoin price in the world’s worst-performing economy. The International Monetary Fund estimates Venezuela’s gross domestic product will decrease 10 percent in 2016 and its inflation rate will reach 720 percent. In 2017, the inflation rate could reach 2,200 percent, and, in 2018, 3,000 percent. The government has spent more than it can borrow.
The Indian Government did not increase the ATM withdrawal limit to Rs 4,000 a day as it planned to do this weekend as most ATMs are not ready to dispense new 500 and 2,000 notes.
In India, where the goal has been to crack down on black money, because India loses billions in cash every year in taxes. The banning of 500 and 1000 rupee notes led to long lines outside of ATMs and bank offices. Since ATMs are filled with 100 rupee notes, they run out right away. Public ire has been increasing in days since the announcement, and reports demonstrate that inquiries for Bitcoin are increasing in a country historically big on buying gold.
As reported previously, inquiries online for “buy bitcoin” and “bitcoin” have been increasing in India. The same holds true in Venezuela.
Last modified: June 10, 2020 10:29 PM UTC