VÍCTOR SALMERÓN
EL UNIVERSAL

The Central Bank of Venezuela (BCV) directorate defined the scale of "bolivar fuerte" (strong-bolivar) coins and bills that it will begin to circulate starting on January 1st, 2008.

The country will travel back in time to 1844, and it will once again circulate coins like the one-cent coin, first on a scale of coins that will increase in increments of five cents; the second coin is a five-cent coin, better know as a "puya;" then the ten-cent coin, followed by the "locha" worth 12.5 cents; next, the "medio" worth 25 cents; and the "real" worth 50 cents; and finally ending up with the new "bolívar fuerte."

The bills will be printed in the following denominations: a bill of two bolívares fuerte, a ten, a twenty, a fifty, and a hundred bolívar fuerte bill, and they will circulate under the Bs.F currency sign.

The monetary reform system is based on taking three zeros off of the present currency. For example, the two-thousand bolivar bill will be converted to a two bolívar fuerte bill, and the fifty-thousand bolivar bill will be  a fifty bolívar fuerte bill.

All salaries and prices will be adjusted in this same manner, so it will not affect income and purchasing power.

Gastón Parra Luzardo, president of the Central Bank, assured in a statement he made to Venevisión that there would be no devaluation of the new currency during its launch, and that the exchange rate, which is currently at VEB.2,150 / USD, will become Bs.F 2.15 / USD.

As a result, the official dollar price will not go up, and the country will have an exchange rate even lower, as compared to the term beginning June 1942 and ending December 1960, when it was at VEB 3.35 / USD.

Starting on October 1st, items for sale will show the price expressed in both current bolivars and the new local currency. In this way, people will have a chance to get used to the new scale. From January 1st, for a period of at least six months, both currencies will be circulating at the same time.

The BCV reported in a statement that "after finalizing the transition stage, the public will be able to exchange their old currency for the new at any financial institute or the very Central Bank, for as long as it takes."

Once all the current bills and coins have been removed, the BCV will issue notices to eliminate the adjective "strong," and from then on, continue to only use the term "bolivar" as the name of the new currency.

The decree-law establishes a formula for rounding-off amounts: all fractions less than 0.5 cents "will be equal to the lower cent," and all fractions equal or larger than 0.5, will be equal to the higher cent.

Since a one-cent coin is going to be minted, the issues concerning the need to round-up or down, and the impact it will have on prices will be minimal.

Businesses need to make the necessary provisions so that from January 1st, their "calculating systems and any mechanisms used to do business" be adapted to the new monetary system.

On this same date, banks are required to adjust their systems so that all their clients' accounts and the rest of their operations be represented in bolívares fuerte.

Checks written up to December 31st, this year, and processed for payment after January 1st, 2008, will be paid in bolívares fuerte.

The decree-law established that sealed paper, revenue stamps, post stamps and seals, that are currently being used will continue to be valid for use until they run out of stock. They should be superseded gradually and their value should be converted to the new system. 

vsalmeron@eluniversal.com