Venezuela Crypto Petro and Petro-Pegged Bolivar to be Nation’s Only Two Currencies

Venezuela To Have Two Monetary Units: Petro And The Petro-Pegged Bolivar

Nícolas Maduro, the president of Venezuela, has been facing a difficult time on his government as the country has been ravaged by an unstoppable hyperinflation.

As part of an initiative to stop the hyperinflation, president Maduro will officially launch two units of account of the country: El Petro, the cryptocurrency of the nation, and a new Petro-pegged Bolivar which will be used to replace the inflated national fiat currency of the South American country. Along with this initiative, pricing mechanism and a new salary policy will be implemented, Maduro promised.

Crypto-Pegged Bolivar Will Be Introduced On Monday

Starting from August 20 onwards, Venezuela will have two national currencies: crypto and fiat backed by crypto. The Petro, the famous official currency launched by Venezuela, will continue to be state-issued and backed by oil. The other currency, a new Bolivar, will now be linked to the price of the Petro.

The “Sovereign Bolivar” will have five zeros less than the current “Strong Bolivar”, which is highly inflated and depreciated after years of hyperinflation. As the inflation was set to reach 1 million percent this year, the government did not have a lot of choices but to create a new currency to try to avert the inflationary process.

According to reports, the new banknotes of the new Bolivar are expected to enter circulation in about a week. The Central Bank of Venezuela will then start to publish official figures for the value of the Sovereign Bolivar in Petro and the value of Petro in international currencies.

The main idea is to have a real official indicator to end the speculation in price that has been helping the inflation to rise.

Crypto-Anchored Salaries and Prices

August 20 will be a non-working day to facilitate a smooth transition to this new monetary unit. Both the Strong Bolivar and the Sovereign Bolivar will circulate for some time until the old currency is not accepted anymore. All the banks already have the new banknotes and are already adapting to implement these new changes.

After the launch, salaries and prices of goods and services will be anchored in the Petro, which, in the words of the president, will improve substantially the income of the workers in the country and restore the price ceiling mechanism. The oil-backed Petro theoretically was available for payments since April, but its use was not widespread.

The Venezuelan National Constituent Assembly is reportedly preparing to reform the Constitution of the country to include a central bank for cryptos in it. This new institution would be responsible for the exchange and the financial policies related to the Petro and other crypto assets. More details about the scale of the transition are still unknown.