Image copyright AFP Image caption The value of a 100-bolivar note has dropped to just 2 US cents on the black market

The Venezuelan government has announced it will remove the country's highest-denomination banknote from circulation within 72 hours to combat contraband.

Central bank data suggests there are more than six billion 100-bolivar notes in circulation, making up almost half of all currency.

Venezuelans will have 10 days from Wednesday to exchange the notes for coins and new, higher-value bills.

President Nicolas Maduro said the move would stop gangs hoarding the notes.

But in India, a similar move to scrap high-value bank notes last month has caused major disruption.

'Mafia hoarding'

In a surprise announcement, Mr Maduro said on Sunday that the 100-bolivar note, worth about 2 US cents (£0.015) on the black market, would be taken out of circulation on Wednesday.

The president said the aim was to tackle transnational gangs which hoard the Venezuelan notes abroad, a move he has in the past described as part of the "economic war" being waged against his government.

He said the gangs held more than 300bn bolivares worth of currency, most of it in 100-bolivar notes.

President Maduro said there were "entire warehouses full of 100-bolivar notes in the [Colombian cities of] Cucuta, Cartagena, Maicao and Buaramanga".

Border closure

He said part of the plan was to block any of the 100-bolivar notes from being taken back into the country so the gangs would be unable to exchange their hoarded bills, making them worthless.

Image copyright Twitter Image caption The governing PSUV party published photos of what it said were warehouses where bolivars were being hoarded

"I have given the orders to close all land, maritime and air possibilities so those bills taken out can't be returned and they're stuck with their fraud abroad," he said speaking on television.

Venezuela's currency has fallen dramatically amid skyrocketing inflation.

On the black market, its value dropped by 55% against the US dollar just in the past month, and the International Monetary Fund estimates that next year's prices will rise by more than 2,000%.

Gangs can therefore buy up Venezuelan banknotes cheaply on the black market in exchange for dollars or Colombian pesos.

They then use the Venezuelan currency to buy subsidised goods in Venezuela, which they in turn sell at a profit in neighbouring Colombia.

Many Venezuelans living near the border buy Colombian pesos to purchase goods in Colombia which they cannot get in Venezuela due to chronic shortages.

Cash crunch?

President Maduro blames both the shortages and Venezuela's record inflation on "imperialist forces" he says are trying to bring down his government.

Image copyright EPA Image caption President Maduro made the surprise announcement during his weekly TV show

He said the aim of these "forces" was "to destabilise out economy and our society, to leave the country without 100-bolivar notes".

Analysts say the move is likely to worsen the cash crunch in Venezuela, where people have already been limited in the amount of cash they can take out at automated teller machines.

Venezuelans have only been given 10 days to exchange their 100-bolivar notes for new coins and bills ranging from 500 to 20,000 bolivars due to be introduced from 15 December.

Critics of Mr Maduro have predicted chaos and doubt that the facilities will be in place for people to exchange all their 100-bolivar notes.

"When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?" opposition leader Henrique Capriles wrote on Twitter (in Spanish).</s>Venezuela, mired in an economic crisis and facing the world’s highest inflation, will pull its largest bill, worth two U.S. cents on the black market, from circulation this week ahead of introducing new higher-value notes, President Nicolas Maduro said on Sunday.

The surprise move, announced by Mr. Maduro during an hours-long speech, is likely to worsen a cash crunch in Venezuela. Mr. Maduro said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank.

“I have decided to take out of circulation bills of 100 bolivars in the next 72 hours,” Mr. Maduro said. “We must keep beating the mafias.”

Critics slammed the move, which Mr. Maduro said was needed to combat contraband of the bills at the volatile Colombia-Venezuela border, as economically nonsensical, adding there would be no way to swap all the 100-bolivar bills in circulation in the time the President has allotted.

Central bank data showed that in November, there were more than six billion 100-bolivar bills in circulation, 48 per cent of all bills and coins. Jose Guerra, a former director of Venezuela’s central bank and now an Opposition lawmaker, said on Twitter that to switch out 100 bolivar notes in such a short amount of time, the central bank “must have an equivalent amount in notes of greater denominations”, which he did not believe was possible.

Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets. No official inflation data is available for 2016 though many economists see it in triple digits. Economic consultancy Ecoanalitica estimates annual inflation this year at more than 500 per cent.

The oil-producing nation’s bolivar currency has fallen 55 per cent against the U.S. dollar on the black market in the last month.

Mr. Maduro previously has said that organised crime networks at the Colombia-Venezuela border buy up Venezuelan notes to in turn buy subsidised Venezuelan goods and sell them for vast profits in Colombia.

Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, getting cash in recent months has proven difficult, and the country’s credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer.

Strict currency controls introduced in 2003 in the country that had pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. — Reuters, AFP</s>Venezuelans have been given just three days to swap their biggest bolivar notes for coins.

The South American nation will withdraw all 100 bolivar notes and replace them with coins of the same face value within 72 hours, state-run news agency AVN said Sunday.

President Nicolas Maduro said the emergency decree was aimed at "mafias" smuggling the notes outside the country. They would be stuck with worthless paper, he said.

It's the latest in a series of desperate measures by the Venezuelan government to contain a spiraling economic crisis. Inflation could hit 500% this year and 1,660% in 2017, according to the International Monetary Fund.

The currency has crashed spectacularly, with a 100 bolivar note officially worth 15 U.S. cents but unofficially buying just two cents. Venezuelans now need to carry bags of cash to buy food and medicines.

Related: 4 reasons why Venezuela became the world's worst economy

The government responded last week by announcing six new notes ranging from 500 bolivars to 20,000 bolivars. Those bills are expected to hit the market on Dec. 15.

Sunday's decree scrapping the 100 bolivar note has been slammed by Maduro's critics, including opposition leader Henrique Capriles.

"When ineptitude governs! Who would think of doing something like this in December and with all the problems we're having?" Capriles wrote on Twitter.

Venezuela isn't the first country in recent weeks to do away with its biggest banknotes. In early November, India scrapped its 500 and 1,000 rupee notes, and introduced new 500 and 2,000 bills in their place.

But the move has caused chaos in an economy that relies on cash for the vast majority of daily transactions. Former Prime Minister Manmohan Singh described the cash crisis as a "mammoth tragedy" late last week.</s>CARACAS, Venezuela — Venezuelan President Nicolas Maduro has ordered the closure of the border with Colombia for 72 hours in a crackdown on currency smuggling by what he says are “mafias” trying to destabilize the socialist-run economy.

Maduro announced the decision Monday following a meeting with top economic aides.

The move comes as he is trying to curb Venezuela’s galloping inflation and roll out a new range of bank notes after deciding to pull from circulation a 100-bolivar bill. It is currently the country’s largest-denominated bill but worth only about 3 U.S. cents at the widely used black market rate.

Maduro warned Sunday that people will not be allowed to bring back 100-bolivar bills from outside Venezuela to trade them in for the new bank notes.</s>CARACAS, Venezuela — Venezuelans took a break from lining up to buy food and medicine Tuesday and spent their day waiting in crowds to deposit bank notes about to become worthless.

As tempers flared in bank lines, political tensions rose as well, with congress officially charging President Nicolas Maduro with dereliction of duty for driving the South American country into economic ruin.

Maduro made a surprise announcement over the weekend that the 100-bolivar note, having already lost most of its value this year, will be taken out of circulation Wednesday. It is the country's largest-denominated bill and the most widely used.

Monday was a bank holiday, so starting Tuesday morning people lined up before banks opened waiting to deposit their 100-bolivar notes in their accounts. Wealthier Venezuelans skipped the lines and instead carted backpacks full of bills to spend them at restaurants and upscale shopping .

People working in Venezuela's informal economy who keep their savings in cash talked gloomily at taxi stands and street kiosks. About one-third of Venezuelans don't have bank accounts, so have no way to deposit the soon-to-be-worthless bills.

The 100-bolivar note fell in value this year from 10 cents to 2 cents. Some are using the bills to decorate Christmas trees or are handing them out as party at bars.

The socialist government has promised to release higher-denomination notes this week amid the world's highest inflation and widespread shortages of goods. But economists say the rollout will not be fast enough to replace the 100-bolivar note and avoid a temporary freeze on cash transactions. On Tuesday, banks quickly ran out of lower denomination bills.

Along with the surprise decommissioning of the most widely used bill, Maduro shut the border with Colombia this week, saying a 72-hour closure was needed to attack "mafias" that are destabilizing the economy by hoarding hard-to-find bolivar notes and sending them back across the border for huge gain. Critics mocked the idea that gangsters would keep their wealth in the world's fastest devaluing currency.

In a largely symbolic gesture, the opposition-controlled National Assembly declared Maduro responsible for the country's economic and social crisis and said he had failed to complete his duties.

Lawmakers began holding impeachment hearings against Maduro in October, even though Venezuela's congress has no power to remove a president from office. They had put the campaign on hold to engage in Vatican-mediated negotiations with the government, but those talks fell apart last week as the opposition protested the government's lack of concessions and legislators resumed the "trial."

Also on Tuesday, the government released four imprisoned opposition activists. The opposition responded that the four should never have been jailed and accused the government of taking prisoners just to release them later for political points.</s>Venezuela will replace its highest denomination bank notes with coins amid an inflation crisis, the country’s government has announced.

President Nicolas Maduro during an hours-long speech said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank.

Critics said the move, which Mr Maduro said was needed to combat contraband of the bills at the Colombia-Venezuela border, was nonsensical because there would be no way to swap all the 100-bolivar bills in circulation in the time the president has allotted.

Central bank data showed that in November, there were more than six billion 100-bolivar bills in circulation, 48 percent of all bills and coins.

Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets.

No official inflation data is available for 2016 though many economists see it in triple digits. Economic consultancy Ecoanalitica estimates annual inflation this year at more than 500 percent.

The oil-producing nation’s bolivar currency has fallen 55 percent against the US dollar on the black market in the last month.

“When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?” two-time opposition presidential candidate Henrique Capriles wrote on Twitter, referring to the upcoming Christmas holiday.

Mr Maduro previously has said that organized crime networks at the Colombia-Venezuela border buy up Venezuelan notes to in turn buy subsidized Venezuelan goods and sell them for vast profits in Colombia.

Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, getting cash in recent months has proven difficult, and the country’s credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer.

Strict currency controls introduced in 2003 that pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. Mr Maduro has blamed an “economic war” being waged against his government by the opposition and the United States.</s>Venezuela, which like India has withdrawn its highest currency note from the market, has cautioned New Delhi about cyber crimes that target digital economy.

Speaking to The Hindu, Venezuelan ambassador Augusto Montiel refuted media reports of financial chaos gripping his country. The recalling of 100 Bolivar notes was not an overnight announcement and the programme was launched to contain the threat of international mafias, he said.

“Venezuela has the highest per head web connectivity in Latin America and we could have gone for digital economy. But several cyber attacks have shown us that the digital economy is in fact far more vulnerable to cyber attacks than real currency transactions,” Mr Motiel said. Venezuela’s telecom and banking sectors suffered a series of cyber attacks in 2016, which has prompted the government to stick to currency-based economy.

“The recall of 100 Bolivar notes is aimed at neutralising the mafia networks based in Colombia and supported by Brazil and the United States who want to destabilise Venezuela financially and politically. This recall is not a sudden move, as Venezuelans were prepared through newspaper advertisements about the arrival of new currency notes which will reach the market from December 15,” said Mr. Montiel.

The envoy said that a vast part of Colombia had been dependent on Venezuela, where Bolivars were smuggled to serve as de facto local currency. This vast market had begun to support international narcotics and smuggled goods trade. “So much so, smuggled Venezuelan currencies were found in places like Ukraine. Roadside shops in Colombia were selling our currency before the currency-recall was declared,” he said.

Mr Montiel said Venezuela would be able to cleanse its economy of the influence of the Colombia-based mafia with the currency recall, which would help Caracas conduct risk-free trade with emerging economies.

“The opposition which is backed by the U.S. is trying to downgrade Venezuelan economy so that the western powers can gain control over the country and its hydrocarbon resources in the Hugo Chavez oil fields.”

He said Venezuela would further upgrade energy ties with India in the coming years.</s>The surprise move, announced by Maduro during an hours-long speech, is likely to worsen a cash crunch in Venezuela. Maduro said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank.

Critics slammed the move, which Maduro said was needed to combat contraband of the bills at the volatile Colombia-Venezuela border, as economically nonsensical, adding there would be no way to swap all the 100-bolivar bills in circulation in the time the president has allotted.

Central bank data showed that in November, there were more than six billion 100-bolivar bills in circulation, 48 percent of all bills and coins.

Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets.

No official inflation data is available for 2016 though many economists see it in triple digits. Economic consultancy Ecoanalitica estimates annual inflation this year at more than 500 percent.

The oil-producing nation's bolivar currency has fallen 55 percent against the U.S. dollar on the black market in the last month.

"When ineptitude governs! Who would possibly think of doing something like this in December amid all our problems?" two-time opposition presidential candidate Henrique Capriles wrote on Twitter, referring to the upcoming Christmas holiday.

Maduro previously has said that organized crime networks at the Colombia-Venezuela border buy up Venezuelan notes to in turn buy subsidized Venezuelan goods and sell them for vast profits in Colombia.

While smuggling of this sort is an issue at the border, it cannot account for nationwide shortages of the most basic goods from food to medicine, which have left millions hungry and doctors crying out for help.

"I have decided to take out of circulation bills of 100 bolivars in the next 72 hours," Maduro said. "We must keep beating the mafias."

Paying a restaurant or supermarket bill without a debit or credit card can often require a backpack full of cash. However, getting cash in recent months has proven difficult, and the country's credit-card machines have recently suffered problems, leaving many businesses asking customers to pay by bank transfer.

Strict currency controls introduced in 2003 that pegged the bolivar to the dollar, coupled with heavy reliance on oil, are seen as the root of the crisis by most economists. Maduro has blamed an "economic war" being waged against his government by the opposition and the United States.

Money supply, the sum of cash and checking deposits as well as savings and other "near money" deposits, was up a staggering 19 percent in the three weeks to Dec. 2 and the curve has been exponential since Maduro's predecessor Hugo Chavez came to power in 1999.</s>Venezuela just made it harder for its citizens to escape the country's cash crisis.

President Nicolas Maduro announced Monday night that he's closing the country's border with Colombia for 72 hours as Venezuelans rush to exchange bills before they become invalid later this week. He accused "mafias" of moving Venezuelan money into Colombia.

It's the latest twist in a crisis that symbolizes Venezuela's severe economic depression, which is having a brutal impact on its citizens' lives.

The Venezuelan government said in a statement that shutting the border with Colombia was necessary "to counteract the criminal attacks against our currency."

Some Venezuelans are going to border towns in Colombia to exchange their currency, the bolivar, for U.S. dollars or to spend their money -- while they still can -- in Colombia where food, toiletries and other basics are plentiful.

Related: Venezuela is replacing its biggest note with a coin

The biggest bill in Venezuela is the 100 bolivar note. On the official, government rate, it's worth about 15 U.S. cents. On the more popular, unofficial exchange rate, the 100 bolivar bill is worth a mere 2 cents. Venezuelans have been weighing stacks of cash to pay for basic items instead of counting individual bills.

To make life a little easier, Maduro's government announced it will start printing six new bills worth between 500 and 20,000 bolivars. Still, the biggest bill on the unofficial rate is still only worth $5.

On Sunday, Maduro's administration announced it will withdraw all 100 bolivar notes and replace them with coins of the same face value within 72 hours. The new bills and coins are expected to debut Thursday.

Maduro says his emergency decree to swap out the bolivar notes for coins on such short notice was aimed at "mafias" he says were smuggling bolivars outside Venezuela.

Swapping out the new bills for old ones within days has forced Venezuelans to deposit their bills at local banks or exchange them as quickly as possible so as to not have worthless paper by the end of the week. It's a sign of the times.

Venezuela is officially suffering through hyperinflation -- the rate of inflation has risen by 50% in the past 30 days, according to a report published Monday by Steve Hanke, an economics professor at John Hopkins University who is an authority on hyperinflation.

The International Monetary Fund forecasts that inflation in Venezuela next year will exceed 1600%.

Food shortages continue to devastate Venezuelans. While food has become more available in certain parts of the country because the government isn't enforcing price controls, it's often extremely expensive for Venezuelans to buy normal items.

Simon Rojas has suffered through Venezuela's economic crisis for years. A 25-year old recent college graduate in Caracas, the capital, Rojas says the government's new bills won't solve anything.

With the currency in free fall, Rojas is now trying to spend his 100 bolivar notes before the 72-hour deadline passes -- and before it loses more value.

"He's selling this decision as a solution, but it's never worked before," Rojas said of Maduro, noting other hyperinflation crises like Zimbabwe's. "I'm trying to spend bolivars, not save them. There isn't an incentive to save."</s>The scrapped notes are on their way to Dubai and are being recycled and transformed into hardboard and fibreboard products. (Photo: PTI)

Dubai: At a time when Indians are struggling to get rid of the banned Rs 500 and Rs 1000 notes, these might soon end up in their homes -- but as a piece of furniture or possibly a photo frame.

According to a report in the Gulf News, these scrapped notes are on their way to Dubai and are being recycled and transformed into hardboard and fibreboard products. The move was initiated by the Reserve Bank of India (RBI) to recycle demonetised notes.

The report stated that about 30 to 40 per cent of the hardboard products made by recycling of these banned notes are being shipped to India from Dubai.The boards imported from Dubai can be used in making wardrobes, shelves, drawers, photo frames and much more.

"We are exporting the fibreboards to various countries in Europe, Africa and also to Australia," said PK Mayan Mohammad, owner of Kerala-based firm chosen by RBI to recycle the notes.

Explaining the entire process behind the recycling, Mohammad said that RBI's regional office in Thiruvananthapuram had approached his firm and inquired about their capacity to recycle scrapped currency.

He said that the pulp of the banned notes is used as a raw material and is thne mixed with wood pulp for making hardboard and fibreboard.

Mohammad said that his firm was approached by the RBI on October 20, weeks before Prime Minister Narendra Modi announced demonetisation move.

"I thought they had decided to recycle the soiled notes instead of burning them. I, too, got to know about the demonetisation plan only when the Prime Minister (Narendra Modi) announced it," Mohammad said.

"We are the only facility with this technology in India. It uses high electrical energy, steam pressure and temperature. We have been picking up almost 60 tonnes of shredded notes a week," he added.
Venezuela swaps its bolivar notes with coins in order to curb hyperinflation.