Betting on the Petro's economic recovery? Venezuela Announces the Establishment of a Digital Currency Central Bank to Advance Reforms
except the day before yesterdayTürkiye in collapse of fiat currency, Venezuela's economic situation is not optimistic.
After the slump in international oil prices in 2014, Venezuela’s foreign exchange earnings from crude oil exports dropped sharply, resulting in a single industrial structure and a high dependence on oil in the countryBoth the economy and the fiat currency are in crisis。
introduceintroduceInflation in Venezuela has doubled local prices every 18 days, and many residents have to buy bitcoins for hedging. Weekly Bitcoin trading volumes in Venezuela have more than doubled since June.
to reportto reportThousands of Venezuelans travel to neighboring Colombia and Ecuador each day, prompting Ecuadorian authorities to declare a state of emergency in several provinces.
In this context, the Maduro government has made frequent moves in recent days, trying to stabilize the situation through monetary regulation.
disclosedisclose, Parliament is preparing to reform the country's 1999 constitution, which includesEstablishment of a central bank for cryptocurrencies to manage financial affairs primarily with the PetroDollar. It is reported that Escarra is one of the main revisioners of the upper constitution. He stated that "this draft constitutional amendment will be submitted to the constitutional board within 35 days."
On the same day, Maduro announced thatVenezuela's state-owned oil company PDVSA to start using petro for all transactions on August 20. This means that all trading partners who purchase PDVSA oil need to exchange US dollars for petro coins for payment, which may bring some liquidity to petro coins. But Maduro did not say whether trading partners would embrace the policy. Maduro also added that salaries would also be pegged to the petro.
In addition, starting from August 20, the petro currency will also be used in parallel with the French currency Bolivar, and the price will also be linked to the Bolivar. The specific exchange rate will be announced by the central bank.
analyzeanalyze, the Maduro government, which is in financial difficulties, hopes to issue financing through the issuance of petro coins, but because petro coins are not circulated in the domestic secondary market and do not have the currency attributes for purchasing daily necessities, they have lost many conservative investors.
Even if the liquidity is solved, there are still hidden concerns about the centralization of petro coins (or in other words, the price of the currency will plummet due to excessive issuance).For example, Maduro has the right to manage the issuance, organization and operation of petro coins. Many analysts say that this is not much different from the poorly managed Bolivar.
Maduro said in the currency reform plan that Venezuela will recover in 2020 because we have added the petro to our national currency and the changes it brings have formed "a new economic model."
But what the result will be remains to be seen.
