The first government in the world to embrace, indeed require, cryptocurrency is Venezuela, where basic necessities are hard to come by. The government of Venezuela has announced that all banks are to adopt cryptocurrencies from now on. AFP, reports that public and private banks must arrogate the Petro, Venezuela’s oil-backed cryptocurrency, as a unit of account. The news comes in the midst of an economic crisis caused by the government that is ravaging the country to pieces.
The order is based on the regulations of the Superintendent of the Institutions of the Banking Sector of Venezuela (SUDEBAN). This is a body that makes up the highest level of Venezuelan banking leadership.
The country is in deep recession and inflation is over 100,000% annual, deep into hyperinflationary collapse. The International Monetary Fund estimates a one million percent mark for inflation this year. A human river is now constantly flowing out of the country into neighboring countries for survival.
Therefore, the order for banks to adopt the crypto currency is seen by many as a way to redeem the economy. The country has devalued the bolivar and in its place are the new sovereign bolivars. The sovereign bolivar is tied to the price of the country’s cryptocurrency.
In addition, the government plans to institute a 3,400% increase in minimum wage, which should further decimate the employment picture in the socialist experiment (among many that have failed in the past) that is Venezuela. Fuel subsidies will also be affected. The government plans a hike in gasoline taxes which for once will not be the world’s cheapest.
In another move to boost the economy, the government seeks to promote savings among the people with gold-backed bonds. The bond offer launch is aimed at saving the local currency which may evaporate with hyperinflation.
While speaking on state TV, Venezuela President Nicolas Maduro said, “No one can say that gold loses its value.”
The country’s cryptocurrency has promised to stabilize the economy. Dubbed “Petro”, the digital token is worth approximately $60. The Petro is now a national currency. At its birth, it was just a token backed by a barrel of oil.
Many commentators argue that the cryptocurrency is just a leeway through which Venezuela can get economic reprieve. The country faces a number of international sanctions that helped cripple its economy. Now, the economy depends on the token to acquire much needed supplies. Let’s see if it works.
