Nicolás Maduro, the president of Venezuela has announced that the country’s national currency, the Bolivar, will be pegged to the government’s own cryptocurrency, the Petro.

Maduro said the initial plan would involve devaluing 96%, giving it an exchange rate of  $1 USD to 6 million Bolivar. We reported back in January that the Venezuelan government will launch their own cryptocurrency, known as the ‘Petro’.

What is the Petro and the reason behind it

Recently, Venezuela has been hit with an array of different problems such as their massive hyperinflation and multiple waves of U.S. sanctions. The Venezuelan president, Nicolas Maduro, appeared on his weekly television series “Los Domingos con Maduro” (Sundays with Maduro) to announce the cryptocurrency.

The value of the cryptocurrency will be based on Venezuela’s massive reserves of oil and gas, as well as its array of gold and other minerals. The president states that the purpose of the cryptocurrency is to “advance the country’s monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country.” Maduro believes the cryptocurrency help to “move  toward new forms of international financing for the economic and social development of the country.”

“We are facing a financial war against the country which we have denounced and the opposition has denied. There are businesspeople who are unaffected by Donald Trump‘s blockade. With this, we will join the 21st century,” Maduro added, as cited by Panorama.

Will Maduro’s plan work?

Before Maduro made the announcement it was projected that inflation in Venezuela would hit 1 million percent. However the announcement has caused outrage across the community.

Maduro states that he is certain this is a big solution which he expects to be followed by a massive increase for the minimum wage, higher corporate tax rates, and increased subsidies for gas prices.
“I want the country to recover and I have the formula. Trust me,” Maduro said on state television on Friday. “They’ve dollarized our prices. I am petrolising salaries and petrolising prices.

The above tweet translates to; Big problems, big solutions! From the first minute the game started off well, and we started winning: 4.777 billion yuan or 735 million dollars is the initial result of the operations of purchase of Petro intent. #AlFuturoConElPetro

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