In an attempt to tackle skyrocketing inflation, Venezuela’s President Nicolas Maduro announced a drastic measure – the creation of a new currency, according to a report by teleSUR. The Bolívar Soberano (Sovereign Bolivar) will replace the current Bolivar Fuerte (VEF).
More interestingly, this wouldn’t be a fiat currency, as it will be pegged to the country’s cryptocurrency, the Petro (which is in turn tied to the price of a local barrel of oil). As far as we know, this is the first attempt of anchoring a national currency to a crypto one, whereas there are a lot of digital tokens backed by the US Dollar, Euro, Chinese Yuan and others.
Maduro claimed the move will "stabilize and change the monetary and financial life of the country in a radical manner starting August 20". He later added that the Petro peg "will end up being consolidated technologically and financially” to “permeate all national and international economic activity".
Despite the bold statements, a lot of analysts aren’t as optimistic, given Venezuela’s track record. The exact Inflation figures in the country vary a lot, depending on the source, as the official state data isn’t that trustworthy. For instance, the IMF recently forecasted that inflation could reach 1,000,000% by the end of 2018, comparing the country’s situation to Germany in 1923 or Zimbabwe in the late 2000’s.
On the other hand, the Petro has issues of its own. Saying the cryptocurrency, which launched in February 2018, has struggled to gain traction would be an understatement – the coin is close to impossible to get. Exchanges hesitate to list it, and President Trump issued an executive order banning all US citizens from touching it. That being the case, a lot of locals prefer storing some of their funds in Bitcoin, a more established cryptocurrency.