President of Venezuela, Nicolas Maduro, announced yesterday that the country will be launching a new version of its currency, the Bolivar, to be officially tied to its state-backed cryptocurrency – the petro.

In an effort to curtail the rampant inflation in the beleaguered South-American economy, the president explained on TV how the new currency will be rolled out:

The new bolivar will be issued on August 20th and will be tied to the petro…We will also knock five zeros off the bolivar

Petro Scepticism

Venezuela has experienced staggering levels of inflation since the economy began its collapse in 2014 after a crash in oil prices destabilised its socialist economic system.

With annual inflation reportedly heading for 1 million per cent, president Maduro had originally planned to cut only three zeroes from the bolivar – but the new measure seems to be borne of an increasing desire for drastic action.

Although no details have been put forward regarding how precisely the new bolivar will be linked to the oil-backed petro, the cryptocurrency has not had a smooth beginning.

Declared unconstitutional by the country’s national assembly, US President Trump has banned American citizens from investing in the cryptocurrency.

With Maduro having touted the new coin as a means of circumventing sanctions – and making the dubious claim that the petro raised $5 billion in the first few weeks of pre-sale – it is understandable that cryptocurrency experts are highly sceptical of the Petro and its ability to save the Venezuelan economy.

While the government claims it is suffering from an “economic war” due to economic sanctions from the US and the EU (among other nations), it is unclear whether the new state-backed cryptocurrency will help the country out its dire predicament.