Venezuela’s socialist dictator Nicolás Maduro has announced the introduction of a new oil-based cryptocurrency to help restore the country’s collapsed economy.
In his weekly televised address, Maduro said that “Venezuela will create a cryptocurrency” backed by oil, gas, gold and diamond reserves, that would allow the troubled country “to advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
“The 21st century has arrived,” Maduro told a group of his supporters and announced the introduction of a “Blockchain Observatory” to analyze the technology behind cryptocurrencies.
According to the state television network VTV, the move represents the “next step in the technological evolution of humanity, and will allow Venezuela to overcome the bureaucracy of the banks and the dependence on paper money,” yet little detail is available about the project’s implementation.
Cryptocurrencies have been increasingly important in the past few years as a way of bypassing financial regulations, with the most popular cryptocurrency Bitcoin recently reaching record value of over $10,000.
The plan is likely an effort to reduce pressure on Venezuela’s collapsed economy, with the country recently defaulting on its debts of over $120 billion, forcing them to turn to Russia and China for. Some economists have suggested that the regime plan to pay their creditors using petrol.
The move is also an attempt to push back and potentially bypass economic sanctions imposed by the U.S. prohibiting Americans from dealing with the country’s state oil company PDSVA, as well as freezing the personal assets of numerous government officials, leading to accusations from Maduro of the U.S. of waging an “economic war” against his regime.
A cryptocurrency would also help reduce the problem of mass inflation, which has rendered Venezuelan currency practically worthless and forced people to carry thousands of banknotes to afford the most basic of products.
With the largest oil reserves in the world, Venezuela’s economy heavily relies on oil, which represents 95 percent of its total exports, however, profits have fallen due to a chronic lack of production and falling oil prices.
Opposition politicians quickly derided the plan as unrealistic. “It’s Maduro being a clown. This has no credibility,” opposition lawmaker and economist Angel Alvarado told Reuters, while fellow opposition legislator Jose Guerra said he could see “no future” in the use of the currency.
Maduro made the announcement during his regular Sunday televised broadcast, which also included a five-hour showcase of socialist Christmas songs and dancing.