Cryptocurrency Backed By Oil To Be Created By Venezuela

Venezuelan President Nicolas Maduro announced the creation of the new cryptocurrency Petro.   
  Credit    Reuters

Economists and opposition leaders say Maduro has refused to overhaul Venezuela's controls that worsened the economic crisis, and point out he may now be seeking to pay foreign creditors in the cryptocurrency and plan to restructure the country's major debt burden - a plan that they believe will likely flop.

Venezuela has announced plans to launch a digital currency, "the petro", backed by the country's oil and mineral reserves.

However, other than that the President offered very few details.

The petro, he said, would help Venezuela "advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade". It is an attempt to cope with a failing national economy and circumvent US sanctions.

Everyday Venezuelans have to face long lines at cash machines to withdraw the country's currency, the bolivar, which is in short supply, the New York Times reported.

According to Business Insider, this move is taking place against a sharp rise in the cost of the bolivar against the USA dollar and weeks after the government issued a new 100,000-bolivar note.


The announcement came as a surprise to some of the followers of cryptocurrencies, as conventional cryptocurrencies are not backed by governments or central banks. The irony is that currency restriction in Venezuela in the last few years have triggered a bitcoin craze among the tech-savvy citizens who are looking to evict controls and obtain dollars for making online purchases. That has dragged down the monthly minimum wage to a mere $4.30 (3.2 pounds).

Maduro views it as a fight against a Washington-backed conspiracy to sabotage his government and put an end to socialism in Latin America, and went as far as declaring a financial "world war".

For the millions of Venezuelans plunged into poverty and struggling to eat three meals a day, Maduro's announcement is unlikely to bring any immediate relief.

Opposition leaders in Venezuela, reportedly, have rejected his idea.

"The Maduro dictatorship continues to deprive the Venezuelan people of food and medicine, imprison the democratically-elected opposition, and violently suppress freedom of speech", Trump said in a statement.

"I see no future in this", added fellow opposition legislator Jose Guerra.

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