The president of Venezuela Nicolás Maduro has announced that the
country’s new cryptocurrency-backed national currency will start
circulating August 20, local state news agency Telesur reported July 25.
Telesur reports that the new currency, the Bolívar Soberano
(Sovereign Bolivar), will have five zeros less than the existing
national currency Bolivar Fuerte (VEF) and will be anchored to the
oil-backed Petro (PTR) digital currency. The Petro was launched by the government of
Venezuela this February.
Maduro noted that the measure intends to align the financial and
monetary system in the country “in a radical manner,” stating that
the reconversion and anchoring to Petro is a “great hope" for
developing a “productive, diversified and sustainable economic
model.”
The president also said that the measure can help with
inflation, shortage of cash, as well as mitigate the long lines at
ATMs that have become routine for Venezuelans.
Maduro expressed continued confidence in the Petro, declaring
that the state-backed digital currency “will end up being
consolidated technologically and financially” and will embrace “all
the national and international economic activity.”
Meanwhile, the reconversion has been criticized by a number of
financial experts, with economist Maxim Ross claiming that the
measure “does not solve anything,” Local 10 News reported in
March.
Opposition legislator and economist Angel Alvarado also spoke
critically of the move, telling CNBC that “taking zeroes
off the money doesn't fix a thing,” and it won’t actually combat
inflation in the economy.
In late 2016, Cointelegraph reported that the Venezuelan
bolívar had suffered a sharp decline in value amidst high
inflation, which reportedly pushed Venezuelans to start buying
Bitcoin (BTC).
Recently, the Venezuelan government has initiated a number of
social projects funded by the Petro. Earlier in July, The Ministry
of Habitat and Housing revealed plans to initiate a
housing construction program for the homeless, funded by the Petro.
In May, president Maduro announced the launch of a
Petro-funded crypto bank to support youth and student
initiatives.