Venezuela’s economy has been struggling for years, bent by a crushing debt and low oil prices, and punished by US sanctions. The Bolivar, the national currency, underwent a tremendous, Weimar-alike hyperinflation, so much that many people started to turn to cryptocurrency, Bitcoin in particular, as a safe value deposit. Beside purchasing cryptocurrency to secure one’s own savings, mining is also thriving in the country, since electrical supplies are almost free thanks to Venezuela’s socialist policies.
The citizens’ interest in cryptocurrency has not always been appreciated by the government, but in December it seemed like president Maduro was about to lead the whole nation towards cryptocurrency, as he announced the issuance of a national cryptocurrency: the Petro.
The cryptocurrency is backed by Venezuela’s oil, gas, gold, and diamond reserves, but not everyone believes in the commodity-backed currency, as remarked by Forbes’ Steve Hanke, who questions the actual convertibility of the digital currency.
An equally negative opinion was expressed last week by the Venezuelan parliament, which outlawed Maduro’s national cryptocurrency and defined it as “an effort to illegally mortgage the cash-strapped country’s oil reserves”.
Despite the parliament’s red light, Maduro does not seem prone to give up just yet on the dream of a national cryptocurrency that would prevent Venezuela from collapsing. Yesterday, speaking at ALBA-TCP (Bolivarian Alliance for the Peoples of Our America - Peoples’ Trade Treaty, international community of countries of Latin America and the Caribbean based on the same ideology - the one of Simón Bolívar, hence the name “Bolivarian” - founded by Venezuelan President Hugo Chavez), Maduro kept advocating for the Petro’s potential for what concerns monetary sovereignty.
Maduro went further on, asking the other countries of the community (which along with Venezuela includes Antigua and Barbuda, Bolivia, Cuba, Dominica, Ecuador, Nicaragua, Saint Lucia, Saint Vincent and the Grenadines, Saint Kitts and Nevis, Grenada) to cooperate in the creation of the Petro cryptocurrency and to adopt it as a “integration currency of our peoples.”
“I have a proposal for the economic teams of the ALBA; to assume jointly the creation of an oil-backed petro cryptocurrency, which will be supported with Venezuelan oil and that very soon we will sustain with the wealth of Venezuela’s gold and diamonds."
Maduro hopes maybe that the support of the countries of the ALBA would provide a way to work around the Venezuelan parliament’s veto. Anyway the parliament decision does not seem to a be serious threat for the Petro, considering Maduro’s control over other institutions in the country.