ANYTHING India does, Venezuela can do worse. Last month, in a dramatic effort to curb corruption, India’s government cancelled all its high-denomination banknotes without warning. Since 98% of transactions in India are done in cash, commerce seized up. It is a huge mess, but India will after a while print enough replacement notes. And it has a plausible plan to help its many poor people join the cashless digital economy.
Not so Venezuela. President Nicolás Maduro says that the constant shortages of more or less everything in Venezuela are caused by evil speculators. (They are actually caused by his price controls.) Mr Maduro claims that “mafias” in Colombia are stockpiling lorryloads of bolívars, the Venezuelan currency, and sneaking across the border to buy up price-controlled goods. Given Venezuela’s soaring inflation, this seems improbable. “The idea that anybody would want to hoard a currency that has lost 60% of its value in the past two months is absurd,” says David Smilde of the Washington Office on Latin America, a think-tank.
Nonetheless, on December 11th Mr Maduro announced that the...Continue reading
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