Venezuela CBDC Tracker

Venezuela is in the research phase. Although the Banco Central de Venezuela seemed to suggest it was launching a CBDC (referred to as the Bolívar Digital) in 2021, what was eventually put out was not a CBDC in practice. So while the central bank can be said to be considering CBDCs, it does not appear to have progressed to the pilot or launch stage.

CBDC History and Development

In February 2021, Venezuelan President Nicolás Maduro said, “We have a surprise: the digital bolivar.” Details were limited at the time, but El Nacional reported that the digital bolivar was going to be part of a larger plan to digitize the economy.

In August 2021, the Banco Central de Venezuela announced that it was going to launch what initially appeared to be a CBDC (referred to as the Bolívar Digital or digital bolivar) on October 1. The announcement noted the CBDC would be issued alongside a currency devaluation that removed six zeroes from the currency (i.e., 1,000,000 sovereign bolivars are equal to 1 digital bolivar). The central bank further noted that “In order to maintain the inclusion of all Venezuelans and meet their transactions needs… the [central bank] will continue to handle the issuance of the bolivar in its physical form.” The central bank said it hoped the CBDC would help strengthen the bolivar and reduce transaction costs.

Shortly after the October 2021 launch of the “digital bolivar,” it quickly became clear it was not a CBDC at all. As seen in this reporting by Bloomberg and in currency shops, the “digital bolivar” refers to a physical banknote. Miguel López, a financial and accounting consulting partner at EY Venezuela, told CoinDesk there are “no digital components that make the bolívar digital different from the sovereign bolivars, which could also be transacted electronically.” Alejandro Castro, a Venezuelan economist and operations manager at consulting firm Econométrica, further said, “In the end, the digital bolivar is digital in name, not in practice.”

In December 2021, Banco Central de Venezuela published a paper on CBDCs that ultimately appeared to confirm once more that the digital bolivar was anything but a CBDC. The report claimed at the time that only China had a CBDC. Furthermore, the paper made no mention of the digital bolivar or developments taking place at the Banco Central de Venezuela.

Human Rights and Civil Liberties Concerns

Venezuela earned a 15 out of 100 in Freedom House’s 2023 Freedom in the World report. As Freedom House noted, “Venezuela’s democratic institutions have been deteriorating since 1999, but conditions have grown sharply worse in recent years due to harsher government crackdowns on the opposition and the ruling party’s use of thoroughly flawed elections to seize full control of state institutions.” The issuance or adoption of a CBDC in Venezuela could worsen these issues.

According to Freedom House, “Opposition leaders have long been harassed, attacked, imprisoned, and otherwise impeded from participating in political processes.” Unfortunately, a CBDC could be used as another tool in this effort. Across the world, governments have often turned to freezing and seizing the money of activists, political rivals, and protestors to undermine the opposition. A CBDC would make such initiatives easier by allowing governments to take direct control of each citizen’s finances.

“Corruption is rampant in Venezuela,” said Freedom House. “The government’s economic policies—particularly its currency and price controls—offer significant opportunities for illicit market activity and collusion between public officials and organized crime networks.” The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.