Venezuela's President Nicolas Maduro seems intent on milking the digital currency fad for all it has. After proposing an oil-backed national cryptocurrency, as it were, Maduro is now calling for an OPEC-wide one that would also include other large producers.
Speaking to media in Caracas after a meeting with OPEC's secretary-general Mohammed Barkindo, Maduro said "I will make an official proposal to all OPEC members and non-OPEC states to work out a joint cryptocurrency mechanism backed by oil."
Venezuela's president first floated the idea of a cryptocurrency in December amid the bitcoin price rally. He put the idea forward as a way for Venezuela to go around its cash problem and use the El Petro instead of physical money to tackle the economic crisis. Although the Venezuelan parliament slammed the plan, claiming that it violates the constitution and attempts to mortgage part of the country's oil reserves, Maduro forged ahead, saying in January that the first sale of El Petros will take place on February 20.
Some 5 billion barrels of crude have been set aside to back the currency, which would be priced at US$60 a piece initially, Russian Sputnik reports, adding that the first batch of El Petros to be sold will be of 100 million coins. The price per coin is tied to the price of Venezuelan crude. Related: Most Big Banks Are Now Bullish On Oil
Last month, Maduro also said mining farms were being set up at Venezuelan schools and universities, although, as Bloomberg notes, the original plan was to pre-mine the cryptocurrency. The petros will be used with national IDs, as per plans. If they work, it should be a relief for cash-strapped Venezuelans: Caracas ATMs are empty, and banks have instituted strict withdrawal limits because of a very literal lack of banknotes.
The International Monetary Fund has forecast that Venezuela's inflation will hit 13,000 percent by the end of 2018, with GDP shrinking by 15 percent.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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