The Venezuelan state’s push to legitimate its new El Petro cryptocurrency now involves an order to the region’s banks that they must adopt El Petro as a unit of account.
According to France 24, a resolution from the Venezuelan Sudeban banking regulator now requires, “Public and private banks to reflect all financial information in (both) bolivars and petros.”
The creation of El Petro, a purportedly oil-back cryptocurrency issued by Venezuela’s communist regime in January, was widely derided by critics, including members of the opposition, who claimed it was yet another example of bad fiscal management by the governing Maduro regime.
The Venezuelan economy has been suffering from inflation for years, and in this year’s hyperinflationary conditions, the inflation rate is expected to surpass one million percent.
Numerous economists have blamed the inflation on the “unorthodox policies” of communist President Nicolas Maduro and advisors.
President Maduro, for his part, has blamed the inflation on “criminal mafias” and foreign interference.
A source to Crowdfund Insider, Venezuelan expat Ibrahim Pazos, says that economic instability in Venezuela began in earnest following the election of the country’s first communist president, Hugo Chavez, when Venezuela sought to reduce its economic and oil industry ties to the US.
A shortage in US dollars circulating in the country began to contract the economy, and when trade partnerships with other more ideologically-aligned nations failed to yield the same economic productivity, economic contractions worsened.
Venzuela then escalated money printing to pay for government program shortfalls.
Now, according to France 24, in an attempt to address the rapidly-escalating cost of products and services in Venezuala, the government has planned a 3400% increase to the minimum wage and an tax increase on oil and gas from 12 to 16%.
A barrel of Venezuelan oil presently sells on international markets for about $12 USD less than average, at about $60 USD.
Declining economic conditions in Venezuela have created an estimated two million refugees, many of whom have been flooding into and straining resources in nearby countries.
Bloomberg recently reported about a Brazilian family who woke to find a Venezualan family camped in their backyard.