Venezuela follows Modi's demonetisation policy; bans 100-unit banknotes

The announcement comes just a month after Narendra Modi banned the Rs 1000 and Rs 500 notes in India

Venezuelan President Nicolas Maduro on Sunday pulled the country’s largest banknote, the 100 bolivar bill, out of circulation. The announcement comes just a month after Prime Minister Narendra Modi banned the Rs 1000 and Rs 500 notes in India.

“In accordance with my constitutional powers and through this emergency economic decree, I have decided to take the 100 bolivar bill out of circulation in the next 72 hours,” the President announced on his TV show Contact with Maduro.

The Venezuelan President also ordered for “all land, air, and sea possibilities closed immediately so that they do not return those notes that were taken.”

Maduro said that the move was necessary to combat the cash hoarding mafia after an investigation revealed that billions of bolivars, in bills of 100, were stashed away by international mafias, mainly in Columbia and Brazil.

“You can stay outside with your scam,” Maduro said, adding that there will be zero tolerance and “maximum penalty” against the criminals.

Though the Maduro government has promised to roll out six larger denomination banknotes soon, Jose Guerra, former director of Venezuela’s central bank and an opposition lawmaker, said on Twitter that it was impossible to switch out 100 bolivar notes in such a short time. He added that it is difficult for the central bank to produce an equivalent amount of notes of a greater denomination.

Venezuela is amid raging inflation and is facing a severe economic crisis due to falling prices in Venezuela’s crucial oil exports. The crisis has led to a shortage of dollars in the country, increasing the prices of imports of food, medicine, and other crucial goods.

Currently, the country owes over 10 million US dollars in debt payments and the International Monetary Fund has forecast the inflation rate to hit 475 per cent by the end of this year.

Though Maduro has been criticised heavily for his decision, he claimed that the crisis was US-backed “capitalist” conspiracy against his socialist government. Maduro also believed that banks were an “accomplice in the plot” seeking to destabilise the country’s already failing economy.

Back in India, after Modi made the announcement on November 8, the country is facing a cash crunch. Even a month after the announcement, there have been unending lines outside the banks and ATMs. The withdrawal limits have been set at Rs 24,000 per week but cash in hand is still critically low.