By
Steve Muchoki
March 20th, 2023
Petro cryptocurrency is to receive an official status of the Venezuelan second official currency, which is believed to be a tool for overcoming economic difficulties.
Currently, the economy of Venezuela is experiencing not the best period of its history. Hyperinflation as well as international sanctions have made the authorities review the country’s existing economic system.
In this circumstances, the President of Venezuela Nicolás Maduro has announced that the national oil-backed cryptocurrency, the Petro, will become an official accounting unit used within the country.
Starting from August 20, Venezuela will have a new accounting system. There will be two officially recognized units of account. The first one will be the state-issued Petro, while the second will be a new petro-pegged denominated Bolivar, which will lose five zeros if compared with the existing national currency.
Such a move is aimed at combating rampant inflation. In July, the International Monetary Fund reported that an inflation rate in Venezuela could reach 1,000,000% by the end of the current year while the GDP could lose another 18%. Experts even compared such a situation with the crisis in Zimbabwe at the end of the previous decade and the economic collapse in Germany during the Weimar Republic.
Just imagine, to buy a cup of coffee in Venezuela, you need to pay one million Bolivar, once it was possible to get a cup of coffee for 450 Bolivar. On the other hand, one million Bolivar is the sum that is equivalent to approximately 30 American cents only.
In his televised address, President Maduro announced:
“As of next Monday, Venezuela will have a second unit of account based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”
According to Maduro, the Central Bank will make the valuations of each currency. Soon, the Bank will start publishing the official figures of the value of the sovereign Bolivar and the value of the Petro. It is said that the country’s state and private banks have already received the new banknotes.
The President also announced the development of new pricing guidelines for goods and services as well as the upcoming launch of a new salary system designed for paying wages in the Petro. Maduro said:
“Basing Venezuelan salaries on the Petro will stabilize people’s buying power; also, there will be stability in product sales. Speculation has ended, which helps all Venezuelans without distinction!”
Although no detailed information was provided, it has become known that the Petro will be actively utilized by the national oil industry and will be linked to the sovereign Bolivar. It means that the Petro is to become a kind of country’s stablecoin.
To recall, the pre-sale of the Petro was launched by the Venezuelan government in February. It is a pet project of President Maduro, who believes that the Petro can reinforce the country’s independence and economic sovereignty. However, the Petro has faced serious critics coming not only from abroad but also from the local legislators, who insist that it was tailor-made for corruption.
