Will Venezuela be able to solve part of its economic problems by introducing this new cryptocurrency, the petro?

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alan avak Posted

Will Venezuela be able to solve part of its economic problems by introducing this new cryptocurrency, the petro?

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Dave Smith

The problem is multifaceted.

First VZ is having problems producing oil with power outages, poorly infrastructure and lack of investment going in for years. It’s really too bad because VZ has the potential to be just as rich as Saudi Arabia judging by proven oil reserves the country has.

Second, there are US sanctions around parts of the economy such that even if VZ had a good oil output it would still suffer immensely. The difficulty in international trading due to the sanctions lead to distorted prices and inflation for necessities.

Third, inflation can reflect currency mismanagement but is not always the case. In this case it is equally possible VZ’s socialism mode of production is highly inefficient, causing supply shortages, which will not be solved by a new currency.

In general, forming a new hard asset backed currency can work to reduce inflation, see Weimar Germany and more recently Zimbabwe, but this doesn’t solve the inefficient production economy in the country nor does it guarantee oil will flow. Investment going in today will take 3-5 years before having an output. If the currency has sound fundamentals it will work, crypto or not. The fact its crypto actually means it is slightly less secure due to cybersecurity concerns and comes across as a little desperate to latch onto the crypto craze, and is late to the party.

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Alex Arvey Restrepo R.
<span lang="en" tabindex="0">Of course not, this currency would not take force since what comes from Venezuela creates distrust as its socio-economic problems are further exacerbated by the dictatorship of President N. Maduro.</span>
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Samara Samara123

very interesting topic! REALLY

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Bajranj

 new cryptocurrency won’t solve Venezuela’s economic crisis … As the oil price has dropped, the country has found itself unable to keep up with debts … The petro would helpVenezuela “advance in issues of monetary sovereignty, … That’s part of what makes them so attractive to criminals – any payments…….

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calwal37

If Venezuela can connect it’s new crypto economy with the economy of it’s neighbors and trading partners, it has a chance.