Petro — the oil-backed cryptocurrency emitted in Venezuela — is the solution proposed by Nicolàs Maduro to both US sanctions and the hyperinflation of the Bolivar.
In a situation where money is worth so little that people give up counting it and start weighing it, using a new currency altogether could be the best way out, and that’s what Venezuela is going to do on 20th August.
A new national currency
Maduro — the president of Venezuela — has declared:
“As of next Monday, Venezuela will have a second accounting unit based on […] the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”
What’s more is that Maduro has also hinted at new pricing guidelines for goods and services and a new salary system for paying wages in Petro.
Quite interesting is also that the cryptocurrency will be pegged to the Bolivar as well, as Maduro put it “Venezuela is going to have a real official marker […] so that the speculation with the Venezuelan currency is over.”
The Central Bank (BCV) will “begin to publish the official figures of the value of the sovereign bolivar according to the Petro and the value of the petro according to international currencies.”
After the 20th of August, there will be two national currencies in Venezuela. One will be the Petro and the other the “sovereign Bolivar.”
The value of the “sovereign Bolivar” will be indexed to the petro taking away five zeros from the current Bolivar Fuerte. The BCV and private banks have reportedly already received the new banknotes.
US perspectives on the Petro
In April Trump issued an order which prohibits US citizens from engaging in transactions using this currency.
The reason behind such a decision is the belief that the reason why this currency has been created is to evade US sanctions and that it is an extension of credit to the Venezuelan government.
It is also rumored that the Petro has been in part created by Russian officials as some sort of experimental system useful to dodge US sanctions.
What’s the Petro?
The Petro — or petromoneda — is a cryptocurrency launched in February 2018 by the Venezuelan government. It is — or at least is claimed to be — backed by oil, gasoline, gold and diamonds reserves of the Venezuelan government.
The currency has been first announced via television on third December 2017. According to Wikipedia Maduro stated that the petro would allow Venezuela to “advance in issues of monetary sovereignty,” and that it would make “new forms of international financing” available to the country.
Such a statement gives further credit to the theories that the Petro is a tool to evade US sanctions.