Poor Venezuelans launch local currency amid cash crunch

Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.

CARACAS, Venezuela — Hard cash is tough to find in Venezuela as the country struggles with financial hardship. So residents in the capital on Friday unveiled their own currency.

The panal, which means honeycomb in Spanish, can be spent in just a few stores. But residents of one neighbourhood desperate for spending cash said they welcome the idea proposed by pro-government groups.

“There is no cash on the street,” said Liset Sanchez, a 36-year-old housewife who plans to use her freshly printed panals to buy rice for her family. “This currency is going to be a great help for us.”

Amid triple-digit inflation and a currency meltdown, there has been a run on cash in Venezuela.

Buying common items such as toilet paper, or paying a taxi driver, requires stacks of the official currency, called the bolivar.

President Nicolas Maduro recently announced that Venezuela is launching a national digital currency called the petro, similar to bitcoin. But he has offered few details.

Salvador Salas, a community leader who unveiled the panal, said its circulation is limited to one poor neighbourhood. Initially 62,000 bills have been printed ones, fives and 10s, he said. One brightly colored bill has a picture of the late President Hugo Chavez wearing a red shirt with his arm raised as if giving a fiery speech.

One panal is equal to 5,000 bolivars, or about $1.50 at the official exchange rate and about five cents on the black market.

The panal revives a concept promoted by Chavez, who proposed 10 communal currencies before his death in 2013.

Jose Guerra, an opposition politician, knocked the idea of an alternative currency. He said that having multiple currencies could add “monetary chaos” to the ongoing economic crisis.