The Surinamese dollar, inflation and Bitcoin

Last week Prime Minister Mark Rutte and Minister for Foreign Trade and Development Cooperation Liesje Schreinemacher paid an official visit to Suriname. The South American country is going through an economically difficult period, with an empty state treasury and a currency that is depreciating by the day. Is it time for Bitcoin adoption in Suriname?

Since 2020, Suriname has a new president: Chan Santokhi. He had to save Suriname, but inherited a bitter legacy from his predecessor Des?? ??Bouterse. The country is struggling with sky-high public debt due to many years of economic mismanagement, according to the International Monetary Fund (IMF). Useful foreign reserves were depleted for years and budget deficits monetized. In other words, new money was created so that more money came into circulation and inflation rose. The inflation rate in 2021 was 59.1% and in 2020 34.9%. Prices will continue to rise in 2022 (to date by 38.9%).

Fiat money is money that derives its value from trust, not from the material from which it is made. The euro and the dollar are fiat currencies, just like the SRD. But confidence in the SRD is now extremely low. Entrepreneurs in Suriname often present their prices in USD and convert them to SRD at the moment, because the exchange rate is different every day. For example, the SRD fell almost 13% against the euro last month alone.

Fiat money in Suriname

Suriname has had problems with fiat money for some time. The SRD replaced the Surinamese guilder (SRG) in 2004. This became the official currency in 1954, when Suriname became a country within the Kingdom of the Netherlands. Initially, the Surinamese guilder was equal to the Dutch guilder, but due to major inflation in the 1990s, one Surinamese guilder was worth less than a Dutch cent. The course of the SRG became unsustainable; with the introduction of the SRD, three zeros were actually removed from the guilder

Changing a currency is not a sporadic phenomenon. For example, neighboring Brazil has gone through seven different currencies since 1967. Five of these were replaced in the period 1986-1994, with the Cruzeiro real as an absolute low point, which lasted only eleven months.

Exchanging fiat money for new fiat money is not a solution if a central bank devalues the new money again through money creation. Print and circulate money. Inflating the money supply is also called monetary inflation and that often leads to price inflation, or rising prices. In principle, central banks can create unlimited money, for example to eliminate budget deficits. The latter happened in Suriname until 2019 and 2020, which led to an excessive amount of money in circulation and thus devaluation of the SRD.

Bitcoin and Suriname?

Bitcoin is called the digital gold because it is scarce and expensive to produce. There is an absolute maximum of 21 million bitcoin and it is getting harder and harder to mine . Unlike the SRD, Bitcoin cannot simply be printed, so Bitcoin is not subject to monetary inflation. This digital gold could therefore be an alternative to the volatile fiat money of central banks. El Salvador and the Central African Republic have already embraced the digital currency.

A comparable transition will not take place in Suriname for a while, but there are signs of adoption. For example, by Kuster Optique, a spectacle shop in Paramaribo. In addition to the various fiat currencies, manager Roy Kartopawiro also accepts USDT and bitcoin in his shop. Roy says he is interested in how this can bring him some financial stability.??

??????Third world countries are the victims of the global economic energy crisis, we feel the rising gas and petrol prices the most. Moreover, the financial environment in Suriname is very bad. Sometimes I can’t access my money and the SRD loses its value every day. Bitcoin offers a solution to these problems,???? he says.

Since the company accepted crypto and Bitcoin earlier this year, a few Surinamese spectacle wearers have purchased a new frame with this. ??????Unfortunately not that much yet???? , Roy admits. ??????Surinamese are generally suspicious of crypto. There are scams here, so people are very careful.????

Still, he continues to look to the future through orange glasses : ??????Bitcoin will free us from the current financial system????

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