December 15, 2017 / 9:06 PM / 8 months ago

Venezuelan community group launches currency to combat cash shortage

CARACAS (Reuters) - A socialist collective in one of Caracas’ emblematic hilltop slums has launched its own currency, the panal, to try to overcome chronic shortages of cash in the crisis-wrought nation.

A cashier holds a stack of 10 Panal notes depicting Venezuela's late President Hugo Chavez at a branch of BanPanal communal bank in Caracas, Venezuela December 15, 2017. REUTERS/Marco Bello

Venezuela’s inflation, considered the world’s highest, is so steep that the central bank is not printing enough bills to keep up. People often must spend hours in queues to take out cash or make bank transfers for even minor purchases.

The group known as El Panal 2021, based in the 23 de Enero barrio overlooking the presidential palace, echoes President Nicolas Maduro’s assertion that cash shortages are caused by bills being smuggled across the border to Colombia.

A man shows a 10 Panal note depicting Venezuela's late President Hugo Chavez outside a branch of BanPanal communal bank in Caracas, Venezuela December 15, 2017. REUTERS/Marco Bello

“It’s complicated to buy products because we do not have cash in our community, so we decided to boost the communal economy,” Jose Lugo, whose commune consists of about 4,000 families, said during a news conference to announce the currency.

The group has started selling the panal for 5,000 bolivars, about 5 U.S. cents at the black market exchange rate.

The currency can be exchanged on Saturday for rice that members of the community grew and harvested, as part of an initial trial of the new bills.

The group hopes people can eventually use the panal, whose three denominations include one bearing a picture of late leftist leader Hugo Chavez, to buy a much broader range of products.

Slideshow (5 Images)

Opposition critics tend to chuckle at such measures, which in the past have included barter exchange markets and similar community currencies, and have gotten little traction.

They say cash shortages are the result of central bank incompetence, adding there is no incentive to smuggle bolivars to Colombia because they do not function as legal tender there.

Still, local residents are so far reveling in a chance to get their hands on cash again.

Homemaker Cindy Masso, 31, was buying her first panals at the group’s small bank on Friday and was planning to spend them on rice for her family on Saturday.

State worker Alfredo Perdomo said he was satisfied with the “quick and easy” process of buying the money, a far cry from Venezuela’s usually crowded and chaotic bank branches.

“This is a benefit for the entire community because it helps us, given we’re going through a difficult time in terms of cash,” Perdomo said as he exited the bank.

Writing by Alexandra Ulmer; Editing by Brian Ellsworth and Lisa Von Ahn

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