Venezuela President Nicolas Maduro on Friday said that Venezuela would issue 100 million units of its new oil-backed cryptocurrency in the coming days, although it is unclear whether any investors will want to purchase the “petro” at a time when the OPEC member is going through a deep economic crisis and its leftist government has little credibility.
Socialist Maduro surprised many last month when he announced the launch of the cryptocurrency, to be backed by Venezuela’s oil, gas, gold and diamond reserves, as a way to circumvent US sanctions that have hurt Venezuela’s access to international banks.
Each unit of the currency would be pegged to Venezuela’s oil basket, which this week averaged US$59.07 per barrel, Maduro said. That implies the total cryptocurrency issued would be worth just more than US$5.9 billion.
However, there is much confusion over how the mechanism will work. Opposition politicians have already panned the project as a fanciful idea doomed to fail and useless at getting food to the millions who are suffering from product shortages and the world’s highest inflation.
Maduro says the cryptocurrency will usher in the “21st century” and boost the nation’s access to hard currency.
“I have ordered the emission of 100 million petros with the legal sustenance of Venezuela’s certified and legalized oil wealth,” Maduro said in a state television address. “Every petro will be equal in value to Venezuela’s oil barrel.”
Venezuela has the world’s largest oil reserves, according to OPEC, and makes about 95 percent of its export revenue from oil. Critics say the government has squandered wealth from a decade-long oil boom and that without reforms, any influx of resources would also be burned through.
Strict currency controls have forced people onto the black market, on which one US dollar can buy 137,000 bolivars. The nation’s strongest official rate is 10 bolivars per US dollar.
That fall in value combined with money-printing by the central bank is behind what many analysts are measuring as hyperinflation.
Prices rose more than 80 percent last month alone, Local economic consultancy Ecoanalitica said, while money supply, according to the central bank, was up more than 1,000 percent last year.
Maduro said the issuance would take place through virtual exchanges in the coming days, but did not give further details.
Cryptocurrencies are decentralized and their success relies on transparency, clear rules and equal treatment of all involved.
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