Venezuela is planning to launch a state-backed cryptocurrency to resolve economic problems that have seen inflation explode to more than 1,000% in a year.
Under President Nicolas Maduro, the country has plunged from economic success on the back of billions of barrels of oil reserves to one of the poorest nations.
Stories from the capital Caracas suggest shoppers must take wheelbarrow loads of cash to buy the cheapest staple foods and that prices have often gone up between the time they have left home and arrived at the shops.
The average monthly wage, according to the International Monetary Fund has fallen to as little as a single dollar.
Maduro and his predecessors have failed to address the country’s problems for years as the value of oil has tumbled from more than $100 a barrel down to $40.
Maduro’s current solution is to launch the petro pegged to the price of oil to encourage investors from abroad to pledge much-needed foreign currency in an initial coin offering (ICO).
With a plan that smacks of populist desperation, Maduro says that his proposal will “stabilise and change the monetary and financial life of the country in a radical manner.”
But the ICO seems doomed to fail as Americans are banned by their government from investing in the petro.
The petro has been around for a few weeks and allegedly raised $375 million on the first day of investment, although there is no independent evidence that any cash changed hands.
Vision for economy
Investors should also doubt the reliability of staking their cash on Maduro’s Venezuela.
His vice-president Tareck El Aissami is accused of drug trafficking and aiding terrorists. The country seems run by self-serving gangsters and the economy is in ruins.
But Maduro is determined to soldier on with his plan for a cryptocurrency.
“The economic reconversion will start on August 20 definitively with the circulation and issuance of the new Sovereign Bolivar, the new monetary coin that is going to have a new method of anchoring the petro. We have the correct vision of what the economic future in Venezuela should be, above all, we will achieve it,” he told the nation.