The Present of Venezuela has just ordered that all government consular services as well as other services and gas stations are able to accept cryptocurrencies including the nations own Petro coin. He is also launching an additional coin in Venezuela backed by gold. This will be the first currency backed by gold since the dropping of the gold standard.
The President stated, “I order the payment of consular services in all embassies and consulates of the Bolivarian Republic of Venezuela in the world, [and] all consular services in the country, in the petro currency or in any cryptocurrency.”
President Nicolas Maduro announced that “the National Association of Airlines will be able to pay in petro or in any cryptocurrency [for] the fuel and the services associated to the airlines in the rendering of their services in Venezuela.” He went on, “a manual be established for the payment of tourist services in the country through the Venezuelan cryptocurrency or any other virtual currency.” According to him, “service providers, hotels, inns, national and international tourist services” asked him for authorization so they can “begin charging in cryptocurrencies and petro.”
He also revealed at the Petro launch event, “We are going to establish new international gasoline services at the border.” Stating, “His government will charge in petro [for] all Venezuelan fuel that is sold in the service stations located at the different points of the border of Venezuela and Colombia.” Stating that several service stations are charging in Colombian pesos and bolivars in international prices, he said that starting on Wednesday in order to reduce smuggling of gasoline at the border, we will proceed to charge in all cryptocurrencies, especially the petro.
The establishment decried the move with Harry Colvin, director and senior economist at Longview Economics, telling CNBC that it is doubtful the petro will be a success and adding that “Venezuela has been known for misappropriation of assets in the past and the central bank has just created hyperinflation so I imagine there’ll be trust and transparency issues.” However he seems to have missed the point that hyperinflation is already rampant in Venezuela and this move is more designed to reduce it.
Professor Steve Hanke, economist and Senior Fellow of the Cato Institute, tweeted on Wednesday, “With Venezuela’s traditional currency failing, why should investors have any faith that the petro will be a stable currency. The petro is just another desperation play by Maduro.” Again with a failing currency, using a new currency backed by gas or gold is more likely to succeed and if it does, maybe other countries will follow suit which will not be what the Central Banks want.
This article is for information purposes only and is not to be construed as financial information for any purposes such as investment or speculation and it is the responsibility of the reader to perform proper due diligence before acting upon any of the information provided. We recommend that you consult with a licensed, qualified investment advisor before making any investment decisions.