Venezuela's Maduro, under pressure from U.S. sanctions, vows to launch cryptocurrency

Venezuela's Maduro, under pressure from U.S. sanctions, vows to launch cryptocurrency

Cheryl Sanders
December 5, 2017

Venezuelan president Nicolas Maduro has announced that the country is creating a cryptocurrency that will be backed by Venezuelan reserves of gold, oil, gas, and diamonds. Maduro added that the petro would support the nation to advance in areas of financial sovereignty, to move past financial obstructions and to make successful financial transactions.

Opposition leaders blasted the announcement, saying it needed congressional approval, while others doubted it will ever see the light of day in an economy with a dim outlook on its horizon, Reuters reported. Decisions like excessive money printing and currency controls have led to the price of bolivar plummeting by 57% against the U.S Dollar in just past one month's time.

President Maduro provided few details about the currency launch, and how he plans to revive the economic situation of his country.

The announcement shows how sanctions enacted by U.S. President Donald Trump's administration this year hurt the country's ability to move money through the global banking system. Compliance departments in the USA have been scrutinizing transactions related to Venezuela.

Maduro's pivot away from the US dollar comes after the recent spectacular rise of bitcoin BTC=BTSP, which has been fuelled by signs that the digital currency is slowly gaining traction in the mainstream investment world.

Venezuela President Nicolas Maduro speaks during his weekly radio and TV broadcast on December 3, 2017.

Certain cryptocurrency followers were confused and surprised by the announcement of the Venezuelan leader. The currency has lost 96% of its value this year.

Maduro's government has a poor track record in monetary policy. As of Tuesday, it took 103,000 Bolivars to buy a U.S. dollar.

The announcement was derided by the opposition leaders.

He could now be seeking to pay bondholders and foreign creditors in the currency amid a plan to restructure the country's major debt burden, opposition leaders said, but the plan is likely to flop. Lawmaker Angel Avedro said that such announcement has "no credibility" and "It's Maduro being a clown".

"The Maduro dictatorship continues to deprive the Venezuelan people of food and medicine, imprison the democratically-elected opposition, and violently suppress freedom of speech", Trump said in a statement. On Sunday he said Venezuela was facing a financial "world war".

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