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Venezuela's Maduro, under pressure from U.S. sanctions, vows to launch cryptocurrency

06 December 2017

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In his regular Sunday (3 December) broadcast, Maduro said Venezuela will "create a cryptocurrency", backed by oil and natural gas reserves called the "petro" to shore up his country's collapsed economy.

The leader might be looking to make payments to foreign creditors and bondholders in the cryptocurrency in an attempt to streamline the significant debt burden of the country, say opposition leaders.

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The currency would help Venezuela "to advance in monetary sovereignty, carry out its financial transactions to overcome the financial blockade", according to Maduro.

"Venezuela will create a...cryptocurrency to advance monetary sovereignty, as it will help to overcome the financial blockade and thus move towards new forms of worldwide financing for the economic and social development of the country".

The announcement throws light on how the sanctions implemented by President Trump in 2017 have hurt Venezuela's ability to transact money via global banks. Venezuela, as covered by CCN, has been ravaged by economic problems caused by hyperinflation and government failures.

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Opposition leaders argue the country's shortages of food and medication are far more pressing and that the digital currency will not address this. As a result, the minimum wage per month has dropped to a meager $4.30. As covered by CCN, the country's problems forced a lot of people in the country to depend on bitcoin and other cryptocurrencies to survive, as neither Western Union nor PayPal work there.

Under the sanctions Washington imposed a ban on purchase of new Venezuelan debt securities by any person in the US that prevents the restructuring of external debt of Caracas.

Some of the opposition leaders ridiculed the announcement.

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Maduro's administration does not have a brilliant history in financial policy. The commodity-backed cryptocurrency, the petro, is unlikely to bring them any immediate relief.

Venezuela's Maduro, under pressure from U.S. sanctions, vows to launch cryptocurrency