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Cryptocurrencies

Could launching a virtual currency save Venezuela's economic crisis?

Tuesday 5 December 2017 | 11:14 AM CET

The Venezuelan president has announced the creation of a new virtual currency called Petro in a bid to ease the country’s economic crisis.

The currency would be backed by Venezuela’s oil, gas, gold and diamond wealth. However, ho details on how, or when, the new currency would be launched, have been presented. The move follows increasing global interest in the crypto-currency Bitcoin. Opposition lawmakers poured scorn on the plan and insisted the proposed currency would need the backing of the National Assembly, and some doubted it would ever happen, according to BBC.

In a televised announcement the Venezuelan president said the new crypto-currency would allow Venezuela “to advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade”. Venezuela’s economy has been hit by falling oil revenue and the plummeting value of its existing currency, the bolivar.

Venezuela has historically relied on its oil wealth to support its economy but a decline in oil prices has sent the country into economic and political crisis. The US and European Union have imposed sanctions, citing repressive policies by the government.

Venezuela owes an estimated USD 140 bln to foreign creditors, and economists suggest the president is looking to try to pay them with Petros as he seeks to restructure the country’s debt, BBC continues.

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