Hyperinflation Museum

Bolivia's Hyperinflation, 1984 to 1985: The Peso Boliviano and Decree 21060

Bolivian prices rose 183 percent in the single month of February 1985, doubling roughly every 20 days (Hanke-Krus World Hyperinflation Table, Cato Institute), and the episode ended almost overnight after Supreme Decree 21060 was signed on 29 August 1985. Along the way the Banco Central de Bolivia issued a 10,000,000 peso boliviano bearer instrument, and in 1987 the whole currency was rebuilt at 1,000,000 to 1.

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Last updated: July 2026

How bad did Bolivia's hyperinflation get?

At its worst, Bolivian consumer prices rose 183 percent in February 1985 alone, an equivalent daily rate of 3.53 percent, with prices doubling every 20.3 days (Hanke-Krus World Hyperinflation Table, Cato Institute). Measured across the full calendar year, average consumer prices in 1985 stood 11,749.6 percent above their 1984 average (Juan Antonio Morales, "Inflation Stabilization in Bolivia," citing UDAPE and Banco Central de Bolivia data).

Those two numbers describe the same event from different distances. The annual figure covers the whole year including its calm final quarter. The monthly figure captures what life actually felt like in La Paz, Cochabamba, and Santa Cruz in early 1985, when a price quoted at breakfast was stale by dinner. Morales and Sachs recorded 68.9 percent inflation in January 1985 and 182.8 percent in February 1985.

Context matters here, because Bolivia is often mentioned in the same breath as the truly astronomical cases and it does not belong there. In the Hanke-Krus table Bolivia ranks 28th of the episodes catalogued, well behind Hungary in 1946, Zimbabwe in 2008, and Yugoslavia in 1994. What sets Bolivia apart is not magnitude. It is the clarity of the ending, and the fact that it happened in a small, open, commodity-dependent economy in the middle of a debt crisis, a far more common situation than the aftermath of a world war.

If you want the full ladder, our ranked survey of every hyperinflation lays out all of the Hanke-Krus entries side by side, and the individual case files on Hungary, Zimbabwe, and Germany go deeper on the three episodes that sit above Bolivia in nearly every measure.

Why did the peso boliviano lose its purchasing power?

Bolivia lost access to foreign credit in 1981 and 1982 and replaced it with the printing press. The central government's deficit jumped from an estimated 5.7 percent of GNP in 1981 to 22.3 percent in 1982, while real tax collections fell from about 9.4 percent of GNP to 4.6 percent in the same span, and to 2.6 percent by 1984 (Morales and Sachs, "The Emergence of Hyperinflation, 1982-85," NBER, published by University of Chicago Press, 1990).

The mechanism is the oldest one in monetary history, dressed in early-1980s clothing. Through the late 1970s Bolivian governments financed spending with foreign borrowing. When the Latin American debt crisis closed that window in early 1982, the state did not cut spending or raise taxes. It borrowed from its own central bank instead. Morales and Sachs are careful on this point: the balance of payments mattered only insofar as it changed the rate of money creation. Annual growth in base money reached 585.1 percent in 1984 and 7,820.4 percent in 1985 (Morales, "Inflation Stabilization in Bolivia").

Then a vicious circle took over, the one economists call the Olivera-Tanzi effect. Bolivian taxes were assessed on last month's activity and collected weeks later. When prices rise by half every month, the real value of every payment shrinks between assessment and collection, so inflation itself destroys the revenue that would have closed the deficit. The consolidated public sector deficit widened to 27.4 percent of GDP in 1984, the economy contracted in real terms every year from 1982 through 1986, and GDP per capita fell from 825 US dollars in 1980 to 555 in 1986 (Morales, "Inflation Stabilization in Bolivia").

Two structural facts made all of this harder. Bolivia's export earnings rested heavily on tin and natural gas, and in the last days of October 1985 the tin market on the London Metal Exchange collapsed, striking the country weeks after stabilization began. And the population had already voted with its wallet. By 1984 and 1985 savings, contracts, and large transactions had shifted heavily into US dollars while wages, taxes, and small change stayed in pesos, which is precisely why the highest denominations were needed at all.

How large did peso boliviano denominations get?

The peso boliviano began in 1963 with a top note of 100 and ended in March 1985 with a 10,000,000 peso boliviano issue, a hundred-thousand-fold increase in the highest face value in roughly twenty-two years, with almost all of that expansion compressed into 1984 and 1985.

The 1963 emission ran from 1 to 100 pesos bolivianos and held steady for nearly two decades. A 500 was authorized on 1 June 1981 and a 1,000 on 25 June 1982. Then the ladder went vertical, and it climbed on two tracks at once. Cheques de gerencia for 5,000 and 10,000 pesos bolivianos were authorized by Supreme Decree 19078 of 28 July 1982, a regular banknote emission in 1984 covered 5,000 through 100,000, and further cheques ran from 20,000 up to 500,000 across 1984 and 1985. By 8 March 1985 the 1,000,000, 5,000,000, and 10,000,000 arrived under Supreme Decree 20732.

Ten million is a big number on a piece of paper, but nowhere near the record, as our page on the highest denomination banknote ever issued explains. What makes Bolivia interesting is the speed: from a 1,000 peso note to a 10,000,000 peso instrument in under three years. New to catalog references? Start with our guide to Pick numbers.

Bolivia's biggest notes are actually bank checks

The 1,000,000, 5,000,000, and 10,000,000 peso boliviano pieces are not banknotes in the strict sense. They are cheques de gerencia, cashier's checks issued by the Banco Central de Bolivia, printed on check-sized paper at 158 by 66 millimetres, payable to bearer, and declared legal tender for public and private payments across the country.

This is the detail that makes Bolivian hyperinflation material genuinely unusual on a collector's shelf. There was no time to commission conventional banknotes with engraving, security threads, and portrait work, so the central bank issued instruments it could produce quickly. The obverse carries a figure of Mercury, the words CHEQUE DE GERENCIA, and the phrase PAGUESE AL PORTADOR, meaning "pay to the bearer." The reverse states that the check circulates as legal tender nationally for both public and private payments. Some varieties carry a 90-day validity clause and some do not, which is one of the main ways collectors distinguish series.

They were also printed abroad, by four different houses. Catalog listings record the 1,000,000 peso boliviano Series A as a product of Casa da Moeda do Brasil, the 5,000,000 and 10,000,000 Series A as products of Giesecke+Devrient in Germany, the lower cheque denominations of 1984 as work of Jeffries Bank Note Company, and the 1987 provisional 1 boliviano overprints as coming from Casa de Moneda in Argentina. Series letters run well beyond A, and different series of the same denomination came off different presses, so two 10,000,000 peso checks can look and feel meaningfully different.

The format matters when you handle one. Cheque de gerencia paper is thinner and less durable than a proper intaglio banknote, and at 158 millimetres wide it will not sit in a standard sleeve sized for a US note. Our notes on storing banknotes and on graded versus raw material both apply with extra force here, because these pieces show handling more readily than most.

How did Decree 21060 stop the hyperinflation in weeks?

Supreme Decree 21060, signed on 29 August 1985 roughly three weeks after Víctor Paz Estenssoro took office, ended the hyperinflation almost immediately. Morales and Sachs note in their NBER study that prices effectively stopped rising by 9 September 1985, and monthly inflation went negative at minus 1.9 percent in October 1985.

The decree, the centerpiece of what Bolivia called the Nueva Política Económica or New Economic Policy, was designed with advice from Jeffrey Sachs, then a professor at Harvard, and implemented under the direction of planning minister Gonzalo Sánchez de Lozada. It rested on two pillars, both aimed squarely at the deficit that was driving money creation.

The first pillar was fiscal. Bolivia raised the price of gasoline and other petroleum products sold by the state oil company YPFB from far below border prices to slightly above international levels, a change Morales describes as an overnight increase of roughly sevenfold in real terms, and demanded immediate payment of substantial back taxes revalued at the new prices. Fuel taxes could be collected fast and evaded almost not at all. To keep the Olivera-Tanzi trap from reopening, Decree 21060 fixed public sector prices in dollar terms, and taxes were later indexed to the dollar as well. Public sector employment was cut hard: more than 60 percent of the Banco Central de Bolivia's own staff were dismissed. In mid-1986 Congress approved a new tax law built around a 10 percent value-added tax.

The second pillar was the exchange rate. Bolivia unified its official and parallel rates (Supreme Decree 21060, articles 1 and 2), accepting a steep de facto devaluation of the official peso, and returned to full convertibility. The mechanism is still studied. Private parties could trade foreign exchange at any price they agreed, while the central bank sold dollars at open auction, the bolsín, and bought at the average price set in the previous session. Bidders knew neither the reserve price nor the quantity on offer in advance. Import duties were restructured, and most price controls were abolished.

It was not a perfectly clean landing. A confluence of shocks in late 1985, the tin market collapse, mishandled auction volumes, and the traditional December civil service bonus, produced a relapse that pushed January 1986 inflation back to 33.0 percent and required a second round of measures. After that, it held. The consolidated public sector deficit fell from 27.4 percent of GDP in 1984 to 9.1 percent in 1985 and 4.0 percent in 1986, and inflation from March 1986 to March 1987 came in at 21 percent, an average of 1.6 percent per month (Morales, "Inflation Stabilization in Bolivia").

How did the boliviano replace the peso boliviano in 1987?

Bolivia created a new monetary unit, the boliviano, by Law No. 901 of 28 November 1986. The reform was announced on 30 December 1986 and took effect on 1 January 1987 at a rate of exactly 1,000,000 pesos bolivianos to 1 boliviano. Peso boliviano instruments were demonetized on 31 December 1987.

Sequence matters here, because the two events are often conflated. The hyperinflation was over well before the new currency arrived. Decree 21060 stopped prices in September 1985; the boliviano came more than a year later, and Morales is explicit that the redenomination "does not have a major role in the stabilization program." Its purpose was clerical, to strip six zeros off every ledger, cash register, and price tag so that ordinary accounting became manageable again. That is the opposite of the pattern in Zimbabwe and Yugoslavia, where repeated redenominations arrived during the crisis and did nothing to slow it.

During the transition, before new boliviano notes were fully available, the central bank overprinted existing peso boliviano checks with their new boliviano values. Those provisional overprints are among the most visually striking pieces of the era, carrying two currencies on one sheet of paper, with the boliviano denomination applied at a right angle across the reverse. They are a compact lesson in what a currency reform physically looks like.

Collector-side, Bolivia sits in a useful spot. The material is genuinely scarce next to the volume of Zimbabwean and Venezuelan notes that reached the market, but it is not a rarity that requires an auction catalog. Condition drives everything, and because these are checks rather than banknotes, crisp uncirculated examples are harder to find than issue figures alone would suggest. Prices vary with inventory, so the live hyperinflation sets category is the accurate reference. For a broader crisis-currency shelf, our guide to the best hyperinflation banknotes and the ready-built hyperinflation sets are the fastest routes in, and how to buy world banknotes covers the mechanics.

Frequently asked questions

Planet Banknote is a family-owned dealership in Sarasota, Florida, founded in 2021. Every note is sourced direct from mints, central banks, and authorized distributors, inspected through our Planet Banknote Verified process, and ships with a free Certificate of Authenticity. US orders ship free via USPS Priority, and every order includes a free bonus gift.

Keep going: browse the full Bolivia banknotes reference for issue-by-issue detail, compare Bolivia against the rest of the record in every hyperinflation ranked, see how grading services treat unusual formats like cheques de gerencia in our banknote grading guide, and look up any unfamiliar term in the banknote glossary. When you are ready to add one to your collection, the hyperinflation sets category shows current availability.