Colombian government proposes to eliminate last three zeros from currency

Colombia is preparing to present a bill that could radically change its currency by proposing to reduce the peso per thousand units.

President Juan Manuel Santos said on Monday, via a statement from his office, that the Colombian Congress will vote on March 16 on whether or not to delete three zeros in the peso. The president told local news channel RCN that the proposal had been under discussion since 2015, but the Bank of the Republic had put it on hold to wait for inflation to drop to a certain point before proceeding.

“Thanks to the control of inflation and the support of the Bank of the Republic, we are once again presenting the idea of ​​removing three zeros from the peso“Santos said in the press release.

Santos said that if the law was passed in March, Colombians would start to see the result of the pecuniary changes in the next six months, calling it a “gradual” process.

The new Colombian banknotes released in 2016 are markedly different from the previous ones, as they had already omitted the triple zero digits and put in their place “thousand“, the Spanish word for“ thousand. ”This foresight should help Colombia by not having to print too much paper money and risking dramatic spikes in its relatively low inflation rate.

“We’ll see how long Congress takes to approve it, now that we’ve taken the proper steps, like making sure the new ticket is zero-zero,” Santos said. “So now that we’ve prepared ourselves, we won’t have to print a lot of invoices, which cuts costs. “

Besides making it easier for foreigners to familiarize themselves with the local currency, there are some practical reasons for eliminating zeros. Government officials say the change has the potential to help fight corruption and money laundering.

Financial analyst Santiago Castro said El Heraldo said old bills are piled up by criminal groups and lose value as they are laundered or kept underground and out of sight of businesses or organizations that are taxed.

“We’re not just switching to a new one peso, but do it to take away the power of dirty money, ”Castro said.

For some, the announcement of a change in currency denominations has fueled fears to reflect the economic crisis in neighboring Venezuela, which has removed zeros from its Bolivar currency in 2008. In another notable case outside the region, India demonetized its 500 and 1000 rupee banknotes to combat money laundering and widespread counterfeiting. The change almost overnight caused panic among banks and citizens who were holding large amounts of money.

Head of the Department of Economics at the University of Cartagena Derwin Pérez, also cited in El Heraldo, said a country should only take action to change its currency in this way when it absolutely needs to due to numbers bordering on hyperinflation.

“Even the less aware citizens know that this is not the case with Colombia since last year the inflation rate was 4.09% and in 2018 we expect to be below 4 %, “Pérez said.

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