In order to combat the coronavirus outbreak in Venezuela, President Nicolás Maduro has ordered the entire country to quarantine themselves. With an inflation rate that rises more than 10,000% per year, the country’s citizens have already been dealing with economic turmoil. Maduro has also shut down the national banking system and regional authorities banned gasoline sales. Meanwhile, peer-to-peer cryptocurrency exchanges have seen increased trading volumes stemming from Venezuela as residents search for a reliable payment system.
Also read: US Cash Crisis: Withdrawal Limits Spark Bank Run Fear
President Maduro and Sudeban Chief Shut Down Venezuela’s National Banking System Over Covid-19 Concerns
Venezuela’s economy has been suffering from hardships for a very long time now as the United Socialist Party of Venezuela and President Nicolás Maduro have devastated the country’s financial system. The Venezuelan economy was already dealing with hyperinflation well before the coronavirus outbreak caused havoc throughout the rest of the world. The Venezuelan bolivar has lost so much value, rising well over 10,000% annually, residents from the nation weigh their banknotes on scales rather than counting each bill. For comparison, the annual inflation for countries like the U.S. sees the dollar rise between 2-3% per year compared to Venezuela’s 929,790% in 2018 and 10,000,000% in 2019. Now the covid-19 scare has consumed the country’s leaders as roughly 40 residents out of a population of 33 million have tested positive for the coronavirus.
The 40 Venezuelans who have covid-19 have caused the United Socialist Party to enact numerous new laws and guidelines throughout the country. Both Antonio Morales Rodriguez, the head of Venezuela’s financial authority, and Maduro have shut down the entire national banking system in order to stop the virus spread.
#EsNoticia || Circular enviada a todas las instituciones del sector bancario, relativa a la continuidad del servicio bancario en línea durante el estado de alarma pic.twitter.com/A7ANCww6R0
— SudebanInforma (@SudebanInforma) March 15, 2020
On March 15, the financial regulator Sudeban sent out a circular to all the financial institutions in the Venezuelan banking sector in regard to the continuity of the online banking service during the state of emergency. Sudeban’s chief Rodriguez did not confirm when the banks could open their doors again and Venezuelans on social media showed discontent with the situation.
“If ATMs worked in this country or if we could withdraw cash I would not complain — In this country they did not have cash rationed — There is so much crazy that I’m crazy,” a Venezuelan resident tweeted in response to the banking shutdown circular.
Peer-to-Peer Crypto Trading Platforms See Increased Listings in Venezuela and Rising Trade Volumes
The recent economic events in Venezuela have caused some residents to find refuge in cryptocurrencies and peer-to-peer markets. Bitcoin.com’s local BCH marketplace, local.Bitcoin.com, has a variety of individuals trading bitcoin cash. There are traders with between 20-100+ successful trades who are willing to buy and sell BCH using Banco Mercantil En Linea (bank transfers) and other forms of payment. Furthermore, local.Bitcoin.com also added petro (PTR) as a payment method for Venezuela and the nation state-issued digital currency can be traded on the peer-to-peer platform.
The analytical data website coin.dance also shows that BTC volumes on Localbitcoins have been trending upwards every week (460-540 BTC per week) since November 2019. The increased volumes have taken place even with the latest KYC requirements and trading restrictions the marketplace has implemented. The marketplace Hodlhodl is seeing a number of Venezuelan traders as well and the platform’s listings show traders are also swapping with petro.
Citizens from Venezuela are trying to weather the economic storm but Maduro is closing everything down over the 40 residents who tested positive for covid-19. Venezuela has some of the largest oil reserves in the world but oil prices worldwide have been devastated, making matters worse. Moreover, the Venezuelan state-issued digital currency PTR is allegedly backed by these oil reserves, hence the name petro. While Maduro and the Venezuelan bureaucrats shut down the national banking sector they also banned queuing for gasoline sales. Gas stations have been systematically shut down throughout the nation causing a shortage even though Venezuela is rich with oil reserves.
Right now a great number of gas stations and businesses within the financial sector are indefinitely suspended according to authorities in the country. Sudeban’s circular written by the financial director Rodriguez explains that the new mandate includes all businesses that are involved with direct interaction with clients.
“All activities involving direct attention to customers, users and the general public through agencies, branches, offices and administrative headquarters throughout the country will be indefinitely suspended,” the esnoticia (circular) highlights.
What do you think about President Nicolás Maduro ordering a national bank shutdown in Venezuela?
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Image credits: Shutterstock, Twitter, coin.dance, hodlhodl, Local.Bitcoin.com, Fair Use, and Pixabay.
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