Latin America

Petro Cryptocurrency-Based Social Payments: Why Does Venezuela Need Them?

In 2018, Caracas launched its own cryptocurrency called the Petro backed by Venezuela’s oil reserves, in a move that came against the backdrop of a severe economic meltdown in the South American nation. At the time, President Maduro vowed the government would create a single exchange rate linked to the Petro.

On Sunday, Venezuelan President Nicolas Maduro stated that the government had approved the use of the Petro cryptocurrency as the basis for calculating social benefit payments to tackle hyperinflation. The latter amounted to 2,959 percent last year.

“Today I accepted a proposal that will add to [the country’s]  financial and economic stability, and which will “petrolise’ social payments to employees of a centralised, decentralised state administration and of the public sector”, Maduro said during a televised speech dedicated to International Worker’s Day.

He emphasised that the measure aims to protect social benefits from inflation, also proposing that pensions be calculated on the basis of the Petro, whose value depends on the cost of oil, gold, iron, and diamonds.

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