Venezuelan Banks Forced to Use Petro Cryptocurrency by President Maduro

Venezuelan Banks Forced to Use Petro Cryptocurrency by President Maduro

Every bank in Venezuela must now use Petro – the oil-backed stablecoin of the controversial president Nicolás Maduro. Both public and private banks have been ordered to disclose all financial information in Bolivar, the country’s official currency, as well as in petro, which was launched in February under suspicious circumstances and has been widely considered as a means to avoid international sanctions, rather than a credible digital asset.

A couple of weeks ago, Petro was even granted the status of “official alternative currency”, joining bolivar as the second accounting unit of Venezuela. Maduro has boasted that Petro has raised 5 billion during its presale, a claim that has since been widely disputed by both international experts and local opposition leaders. No evidence has been provided to support it.

For the last five years, the Latin country has been ravaged by recession and hyperinflation, which International Monetary Fund estimates will reach 1 million percent by the end of the year. An estimated two million citizens have already fled Venezuela, fearing the total economic collapse in the country. The highest-ever inflation rate was recorded just last month, as prices for goods and services increased by a staggering 82,766 percent.

Maduro’s crisis management plan includes 3,400 percent increase in the minimum wage, a rise in gasoline prices that have long been among the cheapest worldwide, and a value added tax hike from 12 to 16 percent. The Bolivar was also updated and severely devalued, as 100,000 old bolivars were exchanges to just 1 new ‘sovereign Bolivar’.

The new sovereign bolivar has been tied to the widely-discredited Petro, which is worth around $60, as it is in turn linked to the price for one barrel of Venezuelan oil. The oil industry has already been forced to use petro for its transactions and now it seems the time has come for the banking system to dance to Maduro’s tune.

The crypto community has widely disregarded Petro, as it clearly seems an attempt to circumvent financial restrictions imposed by US President Donald Trump. US citizens are prohibited from interacting with Petro in any way via Trump’s executive order, released in March, soon after Petro’s official launch.

The new government bonds backed by gold were released this week as well. According to Maduro, they will encourage savings among Venezuelans, who have become exasperated with the constant devaluation of the bolivar.

President Maduro has been reelected for an additional six-year term in May. As you might expect the elections were marred by numerous controversies. International observers and local opposition have deemed them corrupt, fraudulent and unconstitutional.

Image Source: “Flickr”

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