Fenomeno Monetario

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CARACAS: Of all the startling measures announced by President Hugo Chávez this year, from the nationalization of major utilities to threats of imprisonment for violators of price controls, none have baffled economists quite like his venture into monetary reform.

First, Chávez said the authorities would remove three zeroes from the denomination of the currency, the bolívar. Then he said the new bolívar, worth 1,000 old bolívars, would be renamed the "bolívar fuerte," or strong bolívar.

Finally, at the behest of Chávez, the central bank said last week that it would reintroduce a 12.5-cent coin, a symbol of prosperity in the 1960s and 1970s before freewheeling oil booms ended in abrupt devaluations. The coin has been out of circulation for three decades.

Chávez champions these ideas, which will take effect in January, as ways to combat inflation, which in recent weeks crept up to 20 percent, the highest in Latin America.

Officials blame "hoarders" for shortages of basic goods and price increases for food on the black market. Chávez says that the renaming and redenominating of the currency will instill confidence in it.