Petro: Can Venezuela’s oil-backed cryptocurrency save its economy?

Beleaguered government is hoping to raise over $1bn from sale which begins today

Venezuela's national currency, the Bolivar, has collapsed over the past 12 months
Venezuela's national currency, the Bolivar, has collapsed over the past 12 months
(Image credit: Federico Parra/AFP/Getty Images)

Venezuela will today begin selling its own oil-backed cryptocurrency, which the government hopes will raise more than $1bn and save the country’s crumbling economy.

The plan has divided opinion, with The Guardian questioning whether the new cryptocurrency could turn out to be “an ingenious plan to evade US sanctions... or a South American s***coin” – adopting the slang term for digital currencies that become worthless over time.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Venezuela’s traditional currency, the bolivar, has collapsed as is suffers widespread food shortages, hyper-inflation of 13,000% and political repression.

Its dire economic situation has not been helped by financial sanctions imposed by Washington last year, leading to a dash for cash that critics say is the real driving force behind the launch of the petro.

Venezuelan journalist Francisco Toro told CNBC that Venezuela was turning to cryptocurrency out of “desperation” because of its economic isolation from the US.

“This idea that sanctions are hemming demand, that they need to need to get around sanctions, this is [followers of Hugo Chavez] drinking their own Kool Aid and believing their own propaganda,” he said.

Others are more optimistic, with some currency experts suggesting the launch could serve as a precursor to similar projects from other world leaders.

In a recent speech promoting the digital currency, Maduro insisted the petro would help turn Venezuela into “an economic powerhouse”.

It may seem fanciful, but the beleaguered socialist leader “has often proven his doubters wrong”, says The Guardian.