#Venezuela’s #Zelle-ots

Venezuelans' embrace of digital money is less a matter of choice than of necessity.  The Bolivar is now about as valuable as Monopoly money, Andy Rosati of Bloomberg reports from Caracas. 

Zelle Has Turned Dollar-Starved Venezuela Into a Cashless Test Lab

Since taking office in 2013, Nicolás Maduro's socialist government has presided over seven consecutive years of economic contraction. Gross domestic product is one-fifth what it was when his tenure began, according to estimates by the International Monetary Fund.

Inflation, as measured by a Bloomberg index pegged to the price of a café con leche, is running above 4,000%. The largest currency note, the 50,000-bolívar bill, is equivalent to less than a dime.

Venezuela…is an example of what economists call spontaneous dollarization. "The government doesn't tell you, many times it's even illegal," says Steve Hanke, a professor of applied economics at Johns Hopkins University and an expert on hyperinflation. "It happens big time if you have sanctions or occupying armies."

Ecoanalítica estimates that more than 60% of all transactions in Venezuela are now in dollars.

And Venezuelans preferred method of making payments in dollars? Zelle. The digital Peer to peer payment Network owned by consortium of US banks.

"Zelle allows customers of its member banks to send money to friends and merchants, often at no charge, via a mobile phone app. Its owner, Early Warning Services, based in Scottsdale, Ariz., has never promoted it abroad. It's hard to conceive its owners, which include JPMorgan Chase & Co. and Bank of America Corp., would have picked as a test market a country ruled by a vehemently anticapitalist government and whose economy is in shambles."

And yet, so it is, in the Magical Land that is Venezuela.

Read the whole piece by Andy Rosati on Bloomberg here:

Zelle Has Turned Dollar-Starved Venezuela Into a Cashless Test Lab  https://www.bloomberg.com/news/features/2020-11-11/zelle-has-turned-dollar-starved-venezuela-into-a-cashless-test-lab