Venezuela has announced plans to launch a digital currency, “the petro”, backed by the country’s oil and mineral reserves. The petro aims to help ease the country’s monetary crisis but sceptics claim the proposal has no credibility and will not help those in extreme need.
Why It’s Important
Hyperinflation has eroded the Venezuelan bolivia’s value by 97% this year, making imports incredibly expensive and causing many to abandon trust in the currency. The country’s oil reserves made up 95% of its exports in 2016, while oil and gas extraction accounted for 25% of GDP. Rich supplies of resources provide some initial credibility to the proposal, but President Maduro’s questionable track record when it comes to monetary policy is making many sceptical about the proposal. His currency controls and money printing have only added to the monetary crisis. Maduro has not announced when the digital currency would come into use or any details regarding how the country would create such a system.
Opposition leaders argue the country’s shortages of food and medication are far more pressing and that the digital currency will not address this. The digital currency may provide a more trusted medium of exchange, but it is unlikely to help those in excessive poverty.
More on Venezuela
People Are Losing Interest in Cryptocurrency According to Google
The number of times ‘cryptocurrency’ was searched for on Google last week was at its lowest level since late November...
Ten Wars of the Future: Part Five
South China Sea War China is the largest country by population with nearly 1.4bn people, which means roughly 20% of...
Petro: Venezuela’s Cryptocurrency to Solve their Crisis?
It’s no secret that Venezuela has been facing a catastrophic economic crisis as of late. One simply has to look...