Venezuelan President Nicolas Maduro has announced that his country will develop a new digital currency called a petrocurrency amidst an economic free fall.
As Venezuela’s official currency, the bolívar, slips further into turmoil, President Nicolas Maduro has announced a bold move that will see the creation of a new national cryptocurrency dubbed a ‘petrocurrency’ that will be backed by Venezuela’s oil, gas, gold, and diamond reserves.
Maduro made the proclamation this weekend during a regular televised broadcast, where according to the president the petrocurrency will enable Venezuela to “advance in monetary sovereignty, (and) carry out its financial transactions to overcome the financial blockade” as well as enable “new forms of international financing for the country’s social and economic development”.
The announcement bears several interesting implications. Fundamentally, recent sanctions imposed by US President Donald Trump’s administration have made it far more difficult for the country’s central bank through other international regulators.
While Venezuela’s official currency is in near-free fall thanks to national turmoil, the country’s decision to embrace a cryptocurrency backed by its natural assets may enable it to trade far more easily with other international entities – specifically those that have themselves indicated their preference for a national cryptocurrency.
Maduro’s critics have dismissed the move, citing that the creation of a national petrocurrency would require congressional approval, and that other pressing needs such as food and medical supply must take priority.
In a statement to Reuters, opposition lawmaker Angel Alvarado quipped that the announcement had little bearing, offering that “It’s Maduro being a clown… This has no credibility”.
In his address, Maduro offered few specific details as to how the petrocurrency would operate – meaning that we may only see a Venezuelan petrocurrency (if at all) in the coming months and years.
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