Banknotes of Venezuelan Bolivar (VEF)
The bolívar was adopted by the monetary law of 1879, replacing the short-lived venezolano at a rate of 5 bolívares = 1 venezolano. Initially, the bolívar was defined on the silver standard, equal to 4.5 g fine silver, following the principles of the Latin Monetary Union . The monetary law of 1887 made the gold bolívar unlimited legal tender, and the gold standard came into full operation in 1910.
Venezuela went off gold in 1930, and in 1934 the bolívar exchange rate was fixed in terms of the U.S. dollar at a rate of 3.914 bolívares = 1 U.S. dollar, revalued to 3.18 bolívares = 1 U.S. dollar in 1937, a rate which lasted until 1941. Until February 18 1983 (now called that day as the Black Friday ( Viernes Negro ) by many Venezuelans ), the bolívar had been the region's most stable and internationally accepted currency. Since then, however, it has fallen prey to high devaluation.
In 1940, the Banco Central de Venezuela began issuing paper money, introducing by 1945 denominations of 10, 20, 50, 100 and 500 bolívares. 5 bolívar notes were issued between 1966 and 1974, when they were replaced by coins. In 1989, notes for 1, 2 and 5 bolívares were issued.
As inflation took hold, higher denominations of banknotes started being introduced: 1,000 bolívares in 1991, 2,000 and 5,000 bolívares in 1994, and 10,000, 20,000 and 50,000 bolívares in 1998. The first 20,000 banknotes were made in a green color similar to the one of the 2,000 banknotes, which caused confusion, and new banknotes were made in the new olive green color.
The economy of Venezuela
The economy of Venezuela is a mixed economy based in large part on petroleum. The petroleum sector dominates the economy, accounting for roughly a third of GDP, around 80% of export earnings, and more than half of government operating revenues. Venezuela is the fifth biggest member of OPEC by production. From the 1950s to the early 1980s the Venezuelan economy was the strongest in South America.
The continuous growth during that period attracted many immigrants. During the collapse of oil prices during the 1980s the economy contracted. With the recent rise in oil prices and rising government expenditures, Venezuela's economy grew by 9% in 2007. However, there is still considerable income inequality. Government spending as a percentage of GDP in Venezuela in 2007 was 30%, smaller than other capitalist mixed-economies such as France (49%) and Sweden (52%). According to official sources, the percentage of people below the national poverty line has decreased significantly during the presidency of Hugo Chavez, from 48.1% in 2002 to 30.2% in 2006.