Nicolas Maduro, the president of Venezuela, is making an effort to push Petro, the controversial national crypto backed by oil, to international markets. The token was created to solve the chronic inflation problem in the country and help to stabilize the economy, but a lot of people are wondering if it will actually be able to do it.
According to the reports, the Petro will be used for international commercial transactions from October onwards. The announcement was made on national TV by the president of the country during a speech on the latest economic issues in Venezuela.
The president has affirmed that the Petro will be used as a currency in international markets and that the holders will be able to convert it into currencies from the rest of the world. However, Maduro did not state how this will actually happen in detail.
This will be a part of the economic program that was created for the recuperation of the country. He has ordered national banks to use the Petro and now is he is trying his luck with the international financial systems.
It was also required that some state-owned businesses would convert a percentage of their sales into Petros to help the economy. However, some lawmakers in the country are declaring the plan to be illegal.
Reuters Sees Problems With Petro
The main issues that might get in the way of the Petro’s rise as a global currency can be seen in a recent Reuter’s report on the nature of the token. According to the report, the state-owned token, which was launched in February, does not currently trade in any major platform of the world. Also, it is not really backed by Venezuelan oil.
Some analysts of Reuters have been very skeptical on whether the Petro will be accepted in international markets, as it lacks transparency in how the assets actually back the product.
Atapirire, the area that Maduro claimed was the actual petroleum center for backing the coin does not seem to be having any recent activity. The former Oil Minister of the country, Rafael Ramirez, has affirmed that the Petro only exists in the imagination of the government.
Some people said that the token was, in fact, backed by PDVSA, a national oil company, however, the company has $45 billion in debt and has no signs of trading activity at the moment of this report.
This has led some experts to question whether the Petro was simply a smoke curtain for the government to conceal the recent failure of the national currency. To make matters even worse, the president has tied the Petro to a national economic reform to stop the inflation.
This creates problems as there are reports that the Petro lacks solvency and that it is not being as used as the government says. Maduro affirms that the Petro is being used to pay salaries and to fund local social programs in the country already.
Some other problems include the fact that the U. S. president Donald Trump has signed an order to impose new sanctions to Venezuela and to ban dealings in Petro within the country.
As the world’s nations are still struggling a lot with regulatory issues and how to use cryptocurrencies, it looks like the Petro has a very tough road ahead of it and it might not work as intended by the Venezuelan government.