To counter the U.S. led financial sanctions and the collapse of its own currency ‘bolivar’, Venezuelan President Nicolas Maduro has announced the launch of its new state-owned cryptocurrency ‘Petro’.

Venezuela – a country laden with financial sanctions imposed by the U.S. government is currently in a state of deep financial crisis. In order to find a way out of this and reduce the dependency of country’s economic situation on U.S. sanctions, Venezuelan President Nicolas Maduro is looking into the world of cryptocurrencies and virtual digital currencies as a solution to this. The President has announced the launch of the country’s new digital currency called ‘Petro’ which will be backed by oil reserves and other commodity reserves like gas, gold, and diamond.

As per the reports from Reuters, Venezuelan President Nicolas Maduro made this special announcement during a Christmas television special. Maduro who took the office three years back in 2013, is alleged for his autocratic actions and the cause behind the country’s worsening socio-economic condition. According to the statement published on the government’s official website, the state-owned cryptocurrency would help Venezuela the financial ‘blockade’.

The statement further reads as “Venezuela will create a…cryptocurrency to advance monetary sovereignty, as it will help to overcome the financial blockade and thus move towards new forms of international financing for the economic and social development of the country.”

During his Sunday television broadcast, he further stated that the Petro would help Venezuela to “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.” Opposition leaders have denounced this announcement saying that any such step of introducing a new currency would require a congressional approval and it is highly unlikely that ‘Petro’ would ever see the light of the day. Lawmaker Angel Avedro said that such announcement has “no credibility” and “It’s Maduro being a clown.”

Post severe sanctions imposed by the Trump administration, bolivar (Venezuelan currency) has seen a drastic fall in its value against the U.S Dollar. A rapid inflation in its prices has resulted in a huge surge of consumer prices and has further made the situation from bad-to-worse.

This announcement of the state-owned government controlled cryptocurrency has against confused many of its citizens as the usual concept around virtual digital currencies is that they are not backed by any banks. The attempts by Maduro’s government for currency controls have caused many of the tech-savvy people in the country to shift towards Bitcoin and other prominent cryptocurrencies. These people are looking to bypass the controls imposed by the government and obtain dollars which can give them some form of economic stability.

Moreover, when it comes to framing sound monetary policies, Maduro’s government is said to have a very poor track record. Decisions like excessive money printing and currency controls have led to the price of bolivar plummeting by 57% against the U.S Dollar in just past one month’s time. As a result, the monthly minimum wage of the country stands to a critical low of $4.3.

It is a sad situation that such decisions by the Maduro government have led to a condition of extreme poverty in the country.

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