Venezuela is presenting a spectacle to the history of the world economy. Although oil prices have recovered and oil reserves are abundant since last year, Venezuela's total economic volume has contracted for six consecutive years. It is even more important to mention the country ’s inflation data and currency depreciation. It is almost impossible to accurately measure with numbers, which is also a microcosm of the spread of global wealth spread in the US dollar capital market over the past few decades.
IMF forecasts inflation growth in Venezuela
This is precisely because of the US dollar's continued restrictions on Venezuela's economy and related companies. According to the latest data reported by Reuters on January 8th, Venezuelan National Petroleum Corporation (PDVSA) and Refinitiv Eikon reported that Venezuela's oil exports were sanctioned in 2019. The impact fell to about 10.01 million barrels per day, a drop of 32%. According to the US Treasury Department, the Venezuela lost $ 11 billion in oil revenue during this period, leaving Venezuela in an economic free fall state.
Under this circumstance, Venezuela is seeking economic reforms. However, this time, instead of developing the economy to reduce the inflation rate or stabilize the local currency exchange rate, the country is issuing petroleum coins, hoping to quickly realize the realization of wealth from poverty to wealth and to get out. Economic difficulties, the establishment of the petroleum coin will promote currency sovereignty, facilitate financial transactions and break the financial blockade of the US dollar, and allow Venezuela to continue to support economic and social development through rich minerals.
According to the Russian satellite news agency, quoting the local newspaper "National Daily" earlier, the Venezuelan President has ordered the official sale of oil on the international market with Petro settlement. From 2020, the sale of oil will be developed by the Venezuelan government. Cryptocurrency Petros settled, he pledged that "this year's oil production in the country will be sold with its own oil-backed stablecoin" and has signed contracts to sell oil, steel, iron and aluminum, becoming an alternative financial instrument for the US dollar.
Venezuela: heralds the arrival of the Petro cryptocurrency, which is now available to buy the country's huge oil reserves
According to a report by the blockchain industry website Coinidol on January 5, in addition to oil, Venezuela will also promote and sell other valuable products such as iron, steel, aluminum and gold in Petro digital assets, which also means Venezuela becomes the first country to have its own cryptocurrency backed by oil reserves and used to settle oil and other commodity transactions. 2020 may be the year when Venezuela's oil will eventually be converted to Petro cryptocurrency. Due to lack of customers, by 2019 In November, Venezuela's oil reserves reached 30 million barrels.
In response to this, CNN analyzed last week that Venezuela's plan to sell its cryptocurrency Petro's mineral resources will take off this year. Petro started selling as early as February 2018 and became the world's first country to use petroleum-based encryption. currency.
Venezuela has recently proposed to India that it can give discounts on crude oil purchases, but it must be purchased with petroleum coins. In addition to India, different customers will be requested to purchase oil with such petroleum coins. At the same time, Venezuela also announced that at least US $ 3.3 billion has been pre-sold in petroleum coins. So far, Petro's digital assets have been very profitable, which means that petroleum coins seem to let investors see that Venezuela is in economic difficulties. The possibility of getting rich.
Not only that, at present, Venezuela's minimum wage has also been adjusted to pay with petroleum coins. Since the implementation of the new currency, five zeros will be cut off. This means that the minimum wage of Venezuelans has risen to about 60 times the previous level. In July 2019, Venezuela's largest bank also opened a special help desk for the country's cryptocurrency, which, according to Maduro, has proven successful in daily use-despite many experts' opposition.
In this regard, the executive secretary of the Venezuelan Blockchain Observation Center made a clear explanation. He believes that petroleum coins will have a positive and significant economic growth impact on the country in 2020, because petroleum coins, as a cryptocurrency, cannot be liquidated by the US dollar. The system prevents and does not cause Venezuela's economic inflation because it is a secure digital currency with multiple functions.
In fact, many countries around the world may be setting off a race for sovereign cryptocurrencies. The purpose of some countries is also very clear. To achieve economic reversal through cryptocurrencies or to circumvent the restrictions of the US dollar, according to the current news, Venezuela issued petroleum coins. Or just the beginning.
Take the Iranian economy as an example. Following the introduction of Venezuela's petroleum currency, Iran has repeatedly suggested that Russia abandon U.S. dollar-denominated denominated oil. Currently, the settlement service of the Iranian central bank is being restricted by SWIFT. Based on this, the Iranian central bank has already The US dollar was officially replaced with RMB, and RMB was listed as the main foreign currency.
Iran's central bank foreign exchange website replaces US dollar with RMB
In addition, Iran also proposed last month to create a digital cryptocurrency with strategic economic resources such as oil and gold as an anchor, as one of the multiple means to counter the dominant position of the US dollar economy. Look, Venezuela's petroleum coin Petro is clearly one of the most popular examples of countries trying to use their own cryptocurrency to circumvent US banking system sanctions. In other words, they are looking for another way to monetize their oil exports.
The new development of the current situation is that the Malaysian and Turkish authorities suddenly announced that they welcome Iran ’s proposal to replace the US dollar with the cryptocurrency. After that, Malaysia has also proposed to the United States a pan-Asian gold-backed currency among Southeast Asian countries to replace the US dollar for cross-border exchange. It is recommended for international trading because gold is more stable relative to the US dollar.
Not only that, there are currently many countries that have announced the issuance of oil-like currencies (cryptocurrencies). For example, Israel will issue diamond-based cryptocurrencies. Following this, the Royal Mint also launched its own RMG cryptocurrency backed by gold. Prior to this, Turkey, Singapore, and the United Arab Emirates also stated that they have tried to develop their own The cryptocurrency system, and even Russia will officially launch, announcing the use of cryptocurrency to achieve the goal of de-dollarization.
According to the British "Daily Telegraph", citing Vladislav Ginko, an economist at the Russian President's School of National Economics and Public Management, Russia's dedollarization in the field of settlement of commodity transactions will be replaced by bitcoin in addition to the current measures. U.S. dollar reserves, and minimizing restrictions on Russian oil and gas's U.S. dollar-denominated payment flows may be disrupted. The use of Bitcoin to support Russian foreign exchange reserves may start as early as this year. According to Russian media RT reports, Russia is currently studying Establish a digital currency system with gold as an anchor to support cross-border transactions.
Bank of England Governor Carney pointed out in August 2019 that the dominance of the US dollar in the world trading system poses problems for policymakers outside the United States, and he believes that the best way to reduce the US dollar's status is to use a global digital currency To replace the US dollar, if the share of global trade denominated in digital currencies rises, the spillover effect of the US dollar through the exchange rate will weaken, and it will be convenient for countries to trade around the US dollar.
In fact, as early as Carney published this view last month, according to a new report from the United States Democratic Defense Foundation, geostrategic opponents in the United States are deploying encrypted digital currencies with blockchain technology as the core to help avoid Sanctions and confrontation of the financial strength of U.S. banks, in response to this, Jim Rickards, author of the book "Currency Wars" in the United States, further explained that the development of encrypted digital currencies supported by gold, oil, etc. may weaken the US dollar in global financial and foreign exchange transactions Dominance in the system is ending sooner than most expected, and from the latest news, these initiatives will only grow. (Finish) Back to Sohu, see more