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Venezuelan president Nicolas Maduro has announced plans to launch a new cryptocurrency, the “Petro”, backed by the country’s abundant oil and gas supplies. If successful the Petro would be the first digital currency issued by a country.

Maduro’s hope is that the Petro might offer a way to bring money into the country while avoiding the “blockade” of US financial sanctions. In his weekly televised broadcast he announced that, “the 21st century has arrived”, adding that the petro would lead to an:

advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”

Bitcoin and the Bolivar

The severe economic difficulties Venezuelans have faced in recent years has led to the increasing popularity of Bitcoin in the country. Sanctions and government mismanagement have led to an ever less valuable Bolivar, the national currency, which fell by 57% against the dollar in November this year. In a country where dollars are hard to come by Bitcoin has become increasingly popular, offering a relatively stable store of value and way to buy goods through the internet.

Sanctions

Seen by Maduro as perhaps, “the worst aggressions to Venezuela in the last 200 years”, the US sanctions have limited Venezuela’s ability to move funds through international banks. The American government’s view is that Venezuela is ruled by a dictatorship which must be challenged. Treasury Secretary Steven Mnuchin said:

Maduro may no longer take advantage of the American financial system to facilitate the wholesale looting of the Venezuelan economy at the expense of the Venezuelan people.”

Cryptocurrency complexities

Announcing a cryptocurrency and actually achieving it very different things. No details were given by Maduro about how the petro would be created, or when.  Opposition leaders were certainly doubtful. Economist and lawmaker Angel Alvarado described Maduro as “a clown”, adding that the plan, “has no credibility”.

Image Via Shutterstock

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