New Venezuela fiat currency to be tied to petro

July 27, 2018
Chris Wheal

Venezuela bolivar

Venezuela plans to relaunch its currency: Shutterstock

Venezuela has revealed plans to replace its national currency, the bolivar, with a new one that will reportedly be tied to its controversial “petro” token.

The country’s president, Nicolas Maduro, said that the new bolívar soberano (sovereign bolivar) will be launched in Venezuela next month

“The economic reconversion will start of 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,” news reports quoting Maduro stated.

He pledged that the new currency will alter the country’s financial situation “in a radical manner,” adding “we have the correct vision of what the economic future in Venezuela should be, above all, we will achieve it.”

The petro “will end up being consolidated technologically and financially” and will come to “permeate all the national and international economic activity.”

Soaring inflation

The new currency is part of efforts to tackle Venezuela’s hyperinflation, with the rate likely to reach 1,000,000% later this year. Maduro has attempted to ensure that the petro is widely used across society, despite it being declared as “illegal” by the opposition-led congress before its launch.

Venezuela's president Nicolas Maduro

Venezuela’s president Nicolas Maduro faces widespread unrest: Shutterstock

In February, the president called on Venezuela’s banks to mine and use the petro and ordered state-owned companies to convert a percentage of their sales and purchases into the token, as part of initiatives aimed to promote its uptake.

Maduro originally stated that around 100m of the tokens (worth a claimed $6bn) would be issued to lessen the impact of financial sanction imposed by the US. In March, President Donald Trump responded by signing an executive order imposing new sanctions against Venezuela over the petro.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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