Venezuela creates oil-backed currency calling it ‘digital’
AFP – Venezuela on Wednesday set the initial value of a digital currency it created to overcome a liquidity crisis at $60, but its price will fluctuate based on the oil market, authorities said.
The Latin American country — which has the world’s largest proven oil reserves but is facing a crippling economic crisis — said a pre-sale for 38.4 million "Petro" units out of a total 100 million would take place between February 20 and March 19.
The currency’s initial price is based on the cost of a barrel of Venezuelan oil in mid-January, and the currency will be backed by the country’s vast oil reserves.
The Petro’s value will then be "subject to change, depending on fluctuations in the (oil) market," said Hugbel Roa, the minister of science and technology.
President Nicolas Maduro announced in early December that Venezuela — which is under sanctions from the US as well as the EU — was creating the digital currency.
"This is going to allow us to move toward new forms of international financing for the country’s economic and social development," the president said at the time.
Venezuela is mired in a deep economic crisis triggered mainly by a fall in crude oil prices and a drop in oil production, which accounts for about 96 percent of the country’s exports.
It is struggling to restructure its external debt, estimated at around $150 billion by some experts.