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Image credit: Miraflores Palace/Handout via Reuters

Venezuela will start its own digital currency to beat sanctions

Whether or not it works is another matter.
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Miraflores Palace/Handout via Reuters

The authoritarian streak of Venezuela's recent leaders has cost the country dearly. Mismanagement and sanctions have crippled its infrastructure, its money is increasingly worthless and the public is fuming. President Maduro thinks he has a solution, though: creating the country's own cryptocurrency. The "petro" will be backed by Venezuela's key natural resources (diamonds, gas, gold and oil) and, in theory, will help it get around the "financial blockade" imposed by the US and other nations.

Whether or not it works as promised is uncertain... and that's assuming this isn't just bluster. Maduro didn't provide many other details, including a timetable for when the digital currency would be available. The move would need congressional approval (provided Maduro doesn't find a way to act unilaterally). And of course, this could easily be likened to putting a Band-Aid on a bullet wound. Many Venezuelans are struggling to meet basic needs -- what good is a digital currency if it still leaves you starving?

Cryptocurrencies are hot right now (one Bitcoin is worth over $11,000 US as of this writing), so the strategy isn't exactly coming out of left field. Maduro is clearly hoping that this trend will extend to the petro if and when it launches. Given that his government hasn't had much success improving the value of its tangible money, though, there's not much hope that it'll manage virtual cash more effectively.

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