Venezuelan President Nicolas Maduro looked to the world of digital currency to circumvent U.S.-led financial sanctions, announcing on Sunday the launch of the "petro" backed by oil reserves to shore up a collapsed economy.
On his Sunday television show, Maduro announced the nation would create its own “petrocurrency,” backed by reserves in oil, gas, gold and diamonds. It will enable Venezuela “to advance in monetary sovereignty, carry out its financial transactions to overcome the financial blockade,” Maduro said.
“This will allow us to advance toward new forms of international financing for the country’s social and economic development,” he said.
The black market rate for one dollar weakened to 103,000 bolivars on Friday compared with 10,000 at the end of July, according to dolartoday.com, a website that tracks the data. The International Monetary Fund sees Venezuela’s economy shrinking 12 percent this year and annual inflation rising beyond 2,300 percent in 2018.
The announcement bewildered some followers of cryptocurrencies, which typically are not backed by any government or central banks. Ironically, Venezuela’s currency controls in recent years have spurred a bitcoin fad among tech-savvy Venezuelans looking to bypass controls to obtain dollars or make internet purchases.