As Bitcoin—a concept currency backed by the full faith and credit of the cloud—hit US$10,000 in value, Venezuela’s President Nicolas Maduro seemed to see a hail-Mary opening for his country’s collapsing economy, and announced the impending creation of the “petro,” a similar virtual currency.
“The leftist leader offered few specifics about the launch or how the struggling OPEC member would pull off such a feat,” Reuters writes, “but he declared to cheers that Venezuela will create a cryptocurrency.” The “petro” will be “backed by oil, gas, gold and diamond reserves, Maduro said in his regular televised Sunday broadcast.”
While Venezuela sits on one of the world’s largest reserves of hydrocarbons, chronic mismanagement of its once-prosperous economy and nationalized petroleum industry, together with a variety of outside pressures, have reduced it to one of the most desperately impoverished nations in Latin America, with a minimum wage worth US$4.30 per month.
While most observers met Maduro’s declaration with scorn, it held out at least one potential benefit for his government: a way around financial sanctions imposed earlier this year by the United States. With the petro, Maduro claimed, Venezuela would be able to “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
Venezuelan opposition leaders “derided the announcement, which they said needed congressional approval,” Reuters noted. “And some cast doubt on whether the digital currency would ever see the light of day.”
Meanwhile, Venezuela’s real currency, the bolívar, “is in freefall, and the country is sorely lacking in food and medicine.”