Venezuela’s president, Nicolás Maduro, has ordered banks to start adopting the national virtual currency of the country known as the Petro. Banks should adopt it as a unit of account as the country is not able to put an end to its economic and social crisis.
Banks Obligated to Adopt the Petro
Venezuela has a very important economic, political and social crisis that has devastated the country. In order to be able to get additional funds, the government decided to launch a virtual currency known as the Petro. The national crypto is backed by natural resources of the country such as gold and diamonds. Now, the government guided by Mr. Maduro is pressing banks to use the Petro as a unit of account. Public and private banks will have to reflect all their financial information in bolivars and also in Petros.
The information has been released on Monday by Sudeban, the banking regulator of the country. This year, the inflation in the South American nation will reach 1 million percent and in the last months, over 2 million citizens left the country. As the crisis is deepening, some individuals are moving out from Venezuela by feet trying to reach Colombia, Peru, Brazil, or even Chile and Argentina.
Just some weeks ago, Venezuela decided to devalue the bolivar by stripping over five zeroes. The new currency is known as ‘sovereign bolivars.’ Other important economic measures taken in the last months were an increase in the minimum wage of over 3400%, more taxes for petrol and a higher VAT that climbed from 12% to 16%. Additionally, the government took the decision to fix the currency to the Petro, which, as mentioned before, it is already linked to the price of a barrel of oil. At the same time, Maduro launched an offer of bonds that are backed by small gold bullion and that would help Venezuelans store their funds and save money. However, the minimum wage was just $1 USD and now it grew up to $30.
According to some citizens that were able to escape, a doctor with years of study could pay with its salary just a kilogram of meat. In the South of Argentina, for example, they are searching doctors with a minimum wage of over $2,100 USD, and Venezuelans are good candidates for these positions. It is not clear how the intention of the government to link the Petro with financial institutions will help the country solve the country’s economic problems. In the past, the government tried to contact the Argentine and Polish government in order for them to accept the Petro as a means of payment for medicines and food. Nonetheless, both countries rejected the offer. The United States has also warned its citizens urging them not to buy Venezuela’s national cryptocurrency.
Another country that is trying to release its own virtual currency is Iran, which is having troubles with its currency and it has been affected by US sanctions in the last months.