Venezuela Oil Transactions To Be Done On El Petro Cryptocurrency

El Petro is to become the official means of all oil transactions, carried out by Venezuela state-owned oil company, PDVSA. The Country’s, president, Nicolas Maduro, made the pronouncement as part of the latest monetary policies, and designed to counter the effects economic sanctions that have crippled the economy.

It is still unclear whether the country’s oil trading partners have agreed to trade in the country’s national cryptocurrency EL Petro. In addition to oil transactions, EL Petro will also anchor salaries as well as prices of goods and services. Starting August 20, the digital currency is to be used in parallel with the national currency the Bolivar.  The country’s central bank is to issue daily exchange rates for the cryptocurrency.

Venezuela oil-dependent economy hangs in the balance given the economic sanctions put in place by the U.S. Given the devalued currency, the country has had to seek refuge in cryptocurrencies as it looks to generate significant value from its vast oil reserves.

Launched in February, El Petro is backed’ by the country’s oil reserves as well as diamond and gold. The cryptocurrency is the country’s last piece of hope as it continues to grapple with harsh economic sanctions that have made it impossible to take part in import and export business.  Since inception, the cryptocurrency has generated proceeds of more than $6 billion.

However, the economy continues to experience shockwaves even on turning to El Petro as a form of monetary policy.  Thousands of people have left the country into neighboring Colombia and Ecuador as high levels of inflation, and lack of essential goods and services, continue to make life unbearable. Faced with an influx of refugees neighbors like Ecuador have had to declare a state of emergency in some provinces.

In addition to turning to cryptocurrencies as a form of monetary policy, Venezuela central bank has had to knock off five zeroes from the national currency resulting in a new currency.  Dubbed as the ‘Sovereign bolivar’ the new currency will have five zeros less than the highly depreciated bolivar fiat.

To facilitate a smooth transition of the new currency, the government has declared August 20 as a non-working day to facilitate the circulation of the sovereign bolivar. The government intends to phase out the old bolivar which is struggling with inflation of as much as 1 million. It's still unclear if the latest monetary policies will bring some sanity to the ailing economy.