VEF - Venezuelan Bolívar (pre-2018)

History of the Venezuelan Bolivar

The bolivar was first introduced in 1879 with the symbol VEB, replacing the previous currency of the country. Initially, the bolivar was pegged to a silver standard, with one bolivar equivalent to 4.5 grams of pure silver. In 1910, Venezuela shifted from the silver standard to a gold standard, which helped stabilize the currency during the early years. In 1934, the bolivar was fixed in value to the US dollar at an exchange rate of 3.914 bolivars to 1 US dollar.

By the mid-20th century, the bolivar was considered one of the most stable currencies in South America. However, in the 1970s, the decline in oil prices and exports began to significantly impact Venezuela’s economy. Inflation gradually became a serious issue, leading to a weakening of the bolivar’s value.

On February 18, 1983, known as Venezuela's "Black Friday," the government was forced to devalue the bolivar due to issues with public debt and depleted foreign exchange reserves. In an attempt to salvage the economy, the government temporarily closed banks and banned citizens from purchasing US dollars. However, this only worsened inflation and caused widespread panic among the public. "Black Friday" became a milestone in Venezuela's monetary history, signaling the irreparable decline of the bolivar.

The bolivar continued to lose value in the following years, and eventually, in 2008, the Venezuelan government decided to replace the VEB with a new currency, the bolivar fuerte (VEF), with a conversion rate of 1000:1, meaning 1 VEF was equivalent to 1000 VEB. This currency conversion aimed to reduce the excessive number of zeros in the currency and attempt to restore some degree of public confidence in the bolivar.

Venezuelan Bolívar (pre-2018) denominations

Before 2018, the Bolivar had various denominations of banknotes and coins as follows:

Banknotes

Before 2018, Bolivar banknotes came in various denominations, ranging from small values such as 2 Bolivars to high-value bills like 100,000 Bolivars. These notes featured images of famous historical figures and symbols of the country, Venezuela.

During this period, the denominations of banknotes continually increased due to high inflation and the devaluation of the currency. By the end of the 2010s, the Bolivar was losing value rapidly, leading to the issuance of high-denomination notes such as 500,000 and 1,000,000 Bolivars, which became widely used in everyday transactions.

Coins

Before 2018, the Bolivar coins were mostly small denominations, including coins of 1, 2, 5, and 10 Bolivars. These coins were primarily used for small retail transactions and everyday purchases, where using low-value banknotes became inconvenient.

However, due to high inflation and currency devaluation, higher denominations such as 500,000 and 1,000,000 Bolivars became common and were widely used in daily transactions.

Exchange rate of the Bolivar before 2018

Before 2018, the exchange rate of the Bolivar (VES) underwent significant fluctuations, reflecting Venezuela's severe inflation and economic downturn. During this period, the Bolivar depreciated considerably against strong currencies like the US Dollar (USD) and the Euro (EUR), leading to the rapid devaluation of the national currency.

Venezuela had implemented fixed exchange rate policies and multiple exchange rate systems to control the depreciation of the Bolivar. However, these measures could not prevent the currency's weakening due to high inflation, falling oil prices, and prolonged economic crises. The official exchange rate of the Bolivar against the USD for many years was set by the government at a level lower than the rate in the free market (black market exchange rate).

With the severe decline of the Bolivar and economic instability, cryptocurrencies became an alternative for transactions and asset storage in Venezuela. A notable move was the issuance of the Petro in 2018, purportedly backed by the country's oil reserves, to reduce dependence on the USD and address inflation. However, the Petro was not widely recognized. Additionally, Bitcoin and Ethereum were used by the public to protect assets, conduct international transactions, and seek new investment opportunities.