Venezuelan President Nicolas Maduro has urged a group of 10 South American nations to adopt its soon-to-be-launched Petro cryptocurrency.
“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 told delegates at a meeting of the Bolivarian Alliance for the Peoples of Our America - Treaty of Commerce of the Peoples (Alba - TCP). Alba -TCP is a grouping of 19 countries in Latin and Central America.
In his remarks, Maduro said the Petro would function as an “integration” currency among the countries. The Petro is expected to be launched in six weeks, and Venezuela is actively recruiting miners for it.
President Maduro announced the cryptocurrency in December 2017 as a way to get around the economic blockade imposed by the United States. A combination of low oil prices and high public debt has further plunged Venezuela’s economy into crisis, with rampant inflation and a devalued currency.
Venezuela’s public spending spiraled under its former President Hugo Chavez. Massive chunks of its economy, including its national oil company, are at risk of defaulting in international bond markets. Maduro is banking on the cryptocurrency Petro, which is backed with Venezuela’s oil reserves, to circumvent international finance regulation.
In addition to putting out a call for cryptocurrency miners, the Venezuelan government is also kick-starting an ecosystem for the Petro. The country’s sports and youth minister, Pedro Infante, said he was planning to “create a special commission that will be in charge of debating the proposals presented by various sectors, to carry out the financial system of the cryptocurrency Petro.”
Venezuela’s opposition party has declared Maduro’s announcement illegal because it violates the country’s constitution. According to them, the Petro was created “to avoid control over public debt operations” and avoid international pressures. But they are not expected to seriously impede development of the cryptocurrency because major institutions within the country, such as its Supreme Court, are controlled by Maduro’s government.
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