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Maduro calls for ten countries to embrace Venezuela’s new oil-backed petrocurrency

Venezuelan President Nicolas Maduro has called on ten countries in the Bolivarian Alliance to embrace his planned petrocurrency.

Venezuelan President Nicolas Maduro has called on ten countries in the Bolivarian Alliance to embrace his planned petrocurrency.

Venezuelan President Nicolas Maduro has made yet another call for support for his planned oil-backed petrocurrency today, and now the embattled statesman has called on ten countries within the Bolivarian Alliance for the Peoples of Our America to embrace Venezuela’s blockchain pilot project.

Late last year, Maduro announced a bold move that would see the creation of a new national cryptocurrency dubbed a ‘petrocurrency’ that will be backed by Venezuela’s oil, gas, gold, and diamond reserves.

Read: The US Financial Stability Oversight Council forms a new cryptocurrency working group

Maduro made the proclamation this weekend during a regular televised broadcast, where according to the president the petrocurrency will enable Venezuela to “advance in monetary sovereignty, (and) carry out its financial transactions to overcome the financial blockade” as well as enable “new forms of international financing for the country’s social and economic development”.

Now, Maduro has proclaimed that other nations should adopt the planned petrocurrency – stating “I put it on the table, brother governments of the ALBA, the proposal of the cryptocurrency of the Petro, so that we can take it on as one of the projects of integration of the 21st century in a bold way, but also in the manner of a creator and a creative.”

The move comes amidst opposition from Maduro’s own government. Venezuela’s parliament has officially moved to outlaw the creation of the controversial currency. In an interview with Reuters, legislator Jorge Millan commented that the petrocurrency itself is nothing more than the ‘forward sale of Venezuelan oil’.

Maduro’s planned petrocurrency would fundamentally be an avenue to circumvent recent sanctions imposed by US President Donald Trump’s administration, which have made it far more difficult for the country’s central bank to trade through other international regulators.

While Venezuela’s official currency is in near-free fall thanks to national turmoil, the country’s decision to embrace a cryptocurrency backed by its natural assets may enable it to trade far more easily with other international entities – specifically those that have themselves indicated their preference for a national cryptocurrency.

venezuela petrocurrency outlawed

A controversial currency

However, the petrocurrency has, thus far, not seen wide approval. Maduro’s critics have dismissed the move, citing that the creation of a national petrocurrency would require congressional approval, and that other pressing needs such as food and medical supply must take priority.

Maduro has previously issued orders compelling the creation of a petrocurrency – prior to the Venezuelan parliament’s decision to declare the planned currency illegal, Maduro confirmed that each Petro would bear the value of a single barrel of oil, stating that “I’ve ordered the issue of 100 million Petros, based on national wealth. Each Petro will have the value of a barrel of Venezuela’s oil.”

At the time of writing, the petro’s price would be pegged to the value of Venezuela’s basket of oil and fuel exports, which presently trades above the $59 USD mark.

A white paper was due to be issued on January 14th, though the fate of the planned petrocurrency remains up in the air. Should the currency be officially issued, it would mark the first occasion in which a nation has leveraged the blockchain to control the sale of its natural resources.

Read: Citing use cases in emerging markets, Goldman Sachs quips cryptocurrencies are ‘real money’

Have your say!

Do you feel Venezuela could benefit from a petrocurrency, or is the move a desperate attempt at circumventing international sanctions from an embattled president? Let us know your opinion in the comments below!

Follow Bryan Smith on Twitter: @bryansmithSA

Posted: Jan 16, 2018 Author: Bryan Smith Categories: Adoption