But experts are doubtful that its plan to dodge US sanctions with a cryptocurrency is workable.
Venezuelan President Nicolás Maduro has announced that he will be introducing a digital currency called the “petro” in a desperate bid to dodge strict US sanctions. But analysts are skeptical the move will fix the country’s ailing economy.
During his annual televised Christmas message, which featured about five hours of song and dance, Maduro declared that “The 21st century has arrived!” and said that he planned to roll out a cryptocurrency backed by Venezuela’s oil, gold, and mineral reserves.
A cryptocurrency (see: Bitcoin) is a kind of virtual money that uses cryptography, a complex process of encoding data, to keep transactions secure from outside parties — like foreign governments looking to impose sanctions.
Maduro said the petro would help Venezuela “make financial transactions and overcome the financial blockade,” a reference to US sanctions imposed this summer on key figures of Maduro’s government in response to its recent political power grabs.
Venezuela has been struggling in recent months to make payments toward the $120 billion worth of debt it owes to foreign lenders and bondholders, many of whom are in the US. But because of sanctions that restrict some Venezuelan government officials from using the US banking system, paying back those lenders can be difficult if not impossible. The petro could theoretically help Venezuela get around the restrictions (and any future US sanctions) because it provides an alternative path for sending money.
But Maduro didn’t flesh out how the currency would work, how its value would be calculated, or when it would be launched.
Venezuela’s official currency, the bolivar, has lost almost all of its value against the US dollar this year. The country’s economy has descended into chaos in the past few years Read More Here