BTC Wires: Nicolás Maduro, the President of Venezuela, has announced that Petro, the country’s oil-backed cryptocurrency, will be now used as a unit of account for transactions made inside the country. It will be used alongside the new Bolivar, pegged against the Petro, which will substitute the existing national fiat which has reached the heights of inflation.
In a television address, the President announced that the Petro will be mandatorily used by the government oil company PDVSA as a unit of account. Besides this measure, the state is also coming up with a new salary and pricing system based on the Petro for various goods and services. Maduro is hopeful that this new implementation will signal a considerable enhancement in worker income and the reappearance of MRPs or maximum retail prices. The two government-authorised currencies will become operational from 20th August and the sovereign Bolivar is cutting five zeros off the Bolivar Fuerte, which was massively inflated.
The country’s apex bank BCV will be publishing official values of the two currencies according to global currencies. Maduro added that the central and the private banks had both already received stocks of the fresh banknotes. The government had launched the Petro’s pre-sale in February, making 82.4 million of them available for sale. The country authorised this cryptocurrency in a bid to attract foreign investors while evading effects of sanctions imposed by the EU and US, as well as to dodge the possibility of the already rising hyperinflation hitting 1000000%.
The Petro whitepaper snuffs out opposition claims that it’s illegal by clearly stating its full compliance with the national laws and despite its inadequate detailing in some aspects, it does present some convincing examples of economic use cases. The Petro, to be expanded into other spheres soon, will make tax payment and payment of other settlements minimum 10% cheaper than usual. In addition, it is easily convertible to US dollars and other global currencies, which will boost its export trade as well. The only question that remains is how the Government can make sure that the Petro is not purchased using illegally acquired funds. It remains to be seen to what extent these bold reforms can serve in reversing the country’s economic fortunes.