Vocabulary

 
 
 
 
 

Video

 

 
 
 
 

Transcript

A fifty-thousand bolivar note. That was Venezuela’s central bank’s most recent attempt to curb the galloping devaluation of money and shortage of cash.

It has helped little, amid international sanctions against the socialist Maduro government, the value of the bolivar continued to plummet, leaving people desperate for hard currency.

 

This Caracas restaurant sells pastries called empanadas. Like other businesses, it accepts electronic payments, but there are still many customers who prefer paying in cash — in US dollars.

Arcelia Guerrero, Restaurant Owner: “Every day people ask whether we take cash. But we obviously don’t accept large bills; all our food is cheap.”

Dollars are accepted just about everywhere in Caracas — even at this market.

This trader doesn’t want to be filmed. At first, it looks like the eggs are being paid for with the bolivar, the national currency. But it turns out to be US dollars.

There’s more to this trend than just the collapse of Venezuela’s currency, says economist Ronald Balza.

Ronald Balza, Economist: “At the moment, there are large amounts of dollars, bolivars, pesos, and other currencies in circulation. We’ve been through hyperinflation. At the same time, the Central Bank has allowed the cash stocks in circulation to lose their value very quickly, without adjusting their banknotes, accordingly.”

It’s hard to say how dollars enter Venezuela, since the Central Bank no longer provides information on foreign exchange receipts. But the greenback is clearly being circulated here.

Ronald Balza, Economist: “When it comes to dollars from private sources, we don’t know how much there is or why. There is a law that prevents currency trading. But it’s becoming less transparent, because people have to spend their money secretly, even if the money comes from legitimate sources.

Of course, there’s also money that comes from illegitimate sources, like drugs. It’s very difficult to determine.”

Some Venezuelans send remittances home in US dollars, stimulating the import market. There are no shortages in this Caracas supermarket. But the imports here are two or three times more expensive than they are in Europe, or in the US.

Some stores only sell imports. Bodegonez, luxury import shops, can be found almost everywhere.

Female Resident, One: “A lot of people don’t earn dollars, so it’s hard to pay in dollars.”

Male Resident, One: “So much happens under the table, including the use of the dollar. There’s a lot that’s not legal.”

Female Resident, Two: “I’m paid in bolivars, and now, everything I want to buy is sold in dollars.”

Economists have no illusions about the situation. As long as there is no realistic foreign exchange policy, informal supply and demand will determine how people pay for goods.

 

 

Questions

1. The value of the bolivar, Venezuela’s currency is very volatile. Is this correct or incorrect?

2. Do other countries consider Venezuela to be a democracy?

3. The bakery shop only accepts payments in bolivar banknotes. Is this right or wrong?

4. Which do Venezuelans have more confidence in, bolivars or dollars? Why do they feel this way?

5. Are there official money exchange offices? What are some sources of dollars?

6. There are severe shortages of consumer goods in Caracas. Is this entirely true, mostly true, in the middle, yes and no, it depends, largely false or completely false?

7. Is life very easy, easy, difficult, or very difficult for ordinary citizens?

 

A. Do people in your country deal with only one currency (the national currency) or with other (foreign) currencies?

B. Is the national currency stable or volatile?

C. What causes inflation?

D. What might happen in the future?

E. What is the solution to (Venezuela’s) financial instability? What should governments and people do?