Amid Worsening Financial Crisis, Venezuela To Launch Cryptocurrency Backed By Oil And Diamond Reserves

Amidst deepening financial crises, Venezuela is creating a digital cryptocurrency to combat a financial blockade imposed by the United States, President Nicolas Maduro announced.

Called the Petro, it will be backed by Venezuela's reserves of oil and gas as well as gold and diamond holdings, the president said in his weekly television programme.

"This is going to allow us to move toward new forms of international financing for the country's economic and social development," Maduro said on Sunday (3 December).

The development comes in at a time when Venezuela is facing acute financial problems after rating agencies and creditors declared the government and its state-run oil firm PDVSA to be partially defaulting on missing interest and principle payments on various bonds.

Maduro has blamed the country’s problems on sanctions imposed by the US earlier in August which barred American firms and citizens from purchasing new Venezuelan government or PDVSA bonds.

Venezuela is currently suffering from an acute economic crisis triggered mainly by a sharp fall in global crude prices coupled with a drop in oil production. Petroleum forms the South American nation’s primary source of hard currency.

Over the last one year, the Venezuelan Bolivar has plunged by 95.5 per cent against the United States Dollar on the black market.

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