1 Bolivar – Venezuela

In 2021, Venezuela remained entrenched in a profound monetary crisis, characterized by hyperinflation that had rendered the official currency, the bolívar, virtually worthless for years. The government's response, a series of successive redenominations and the introduction of the "bolívar digital" in October 2021, failed to address core issues. These measures, which simply lopped zeros off the old currency, did not restore public confidence or tackle the root causes: excessive money printing by the central bank to finance massive fiscal deficits and a collapsed productive economy. The bolívar's extreme devaluation forced most transactions into U.S. dollars for any meaningful purchase, creating a de facto dollarized economy in major cities despite official prohibitions.

This dollarization occurred organically from the ground up as citizens and businesses sought a stable store of value and medium of exchange. By 2021, an estimated two-thirds of all transactions in the country were conducted in foreign currency, primarily U.S. dollars, which circulated widely in cash and through digital transfers. This spontaneous adoption provided a crucial lifeline, stabilizing prices for those with access to dollars and allowing a fragile economic rebound in some sectors. However, it also created a stark two-tiered society: a minority with access to foreign currency could navigate the crisis, while a majority reliant on bolívar-denominated wages or pensions faced extreme poverty, as their incomes were evaporated by inflation.

The situation was further complicated by stringent U.S. sanctions, which intensified during the Trump administration and remained under Biden, severely restricting Venezuela's oil exports and access to global financial markets. While the government blamed these sanctions for the economic collapse, most economists viewed them as an aggravating factor on top of years of profound mismanagement, corruption, and the destruction of the national oil industry. Consequently, 2021 ended with Venezuela's currency system in a fractured and unstable equilibrium: a largely abandoned official bolívar, a pervasive unofficial dollarization that offered limited stability, and no clear path toward a unified or sovereign monetary recovery.