Venezuelan Digital Currency Backed by Oil

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Venezuelan Digital Currency Backed by Oil

Economists and opposition leaders say Maduro has refused to overhaul Venezuela's controls that worsened the economic crisis, and point out he may now be seeking to pay foreign creditors in the cryptocurrency and plan to restructure the country's major debt burden - a plan that they believe will likely flop.

Venezuelan President Nicolas Maduro wants his own version of Bitcoin, announcing Sunday that his socialist government will create a cryptocurrency.

The leftist leader offered few specifics about the currency launch or how the struggling OPEC member would pull off such a feat, but he declared to cheers that "the 21st century has arrived!" Maduro added that the petro would support the nation to advance in areas of financial sovereignty, to move past financial obstructions and to make successful financial transactions.

The announcement throws light on how the sanctions implemented by President Trump in 2017 have hurt Venezuela's ability to transact money via global banks.

Everyday Venezuelans have to face long lines at cash machines to withdraw the country's currency, the bolivar, which is in short supply, the New York Times reported.

Maduro's pivot away from the US dollar comes after the recent spectacular rise of bitcoin BTC=BTSP, which has been fuelled by signs that the digital currency is slowly gaining traction in the mainstream investment world.

Maduro announced the new cryptocurrency known as "petro" on his weekly national TV program Sundays with Maduro. Hitherto cryptocurrencies have not been backed by any government or central bank.

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.

Maduro's administration does not have a brilliant history in financial policy.

The announcement was derided by the opposition leaders.

Over the past year, the Venezuelan bolivar has plummeted 95.5 percent against the dollar on the black market. As a result, the minimum wage per month has dropped to a meager $4.30.

"It's Maduro being a clown". Reuters quoted lawmaker Angel Alvarado, who said that the idea has "no credibility".

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