The Primal Depository financial institution of Venezuela volition launch a key banking company digital currency (CBDC) in October alongside a monetary redenomination that will cut six zeros from the currency due to raging aggrandizement.

As of Oct. one, the digital Venezuelan bolivar volition begin circulation in the economy. Its cash equivalent will go a new 1-bolivar coin, along with banknotes ranging from 5 bolivars to 100 bolivars as function of the half-dozen-zero readjustment of the currency.

The Central Bank of Venezuela made the announcement on Friday. The CBDC will be accompanied by an SMS-based exchange arrangement to facilitate payments and transfers among its users. The bank claimed that the CBDC and redenomination of the currency will have no result on the bolivar's value and that the overhaul is office of a move to simplify the use of the currency.

"The bolivar will non be worth any more or any less, in order to facilitate its employ, it is beingness taken to a simpler budgetary scale," the central bank said.

Venezuelan President Nicolás Maduro beginning teased the idea of a digital bolivar back in Feb as he outlined the issuance of CBDC equally one of the deportment the regime was taking to modernize and rebuild the economic system.

The president is no stranger to state-issued digital currencies, having launched the oil-pegged Petro coin in 2018 as a tool to circumvent United states sanctions.

This is the 2d time in iii years that Venezuela has readjusted the bolivar afterwards Maduro cut 5 zeros from the currency in 2018 as inflation striking its peak of 1.eight million percent. In 2020, the annual inflation charge per unit was estimated to be around 2,300%.

Related: Fed governor says CBDCs remain 'a solution in search of a problem'

Luis Vicente León, economist and president of Caracas-based Datanalisis, criticized the move, telling Bloomberg on Thursday that another redenomination of the currency volition do nothing to address the underlying issues that are debasing its value:

"Removing those zeros does not solve, at all, the reason that originated the problem. Without resolving the root of the issue, nosotros will accept the same problem in months."

Venezuela has been dealing with a long-running economic crisis as the economy suffers from U.South. sanctions and hyperinflation. In September 2020, Maduro proposed an anti-sanctions nib that sought to employ crypto as a tool to evade the sanctions imposed on the state.