It appears that Venezuela has got no alternative but to move towards establishing a cryptocurrency central bank. This is because of the country’s domestic crisis that is posing a bigger threat than the policymakers would have thought or imagined. On its part, the government is getting ready to change the constitution too. Significantly, the latest thinking comes on the heels of the International Monetary Fund (IMF) predicting a million percent hyperinflation. That will only drag down the domestic fiat currency value further compared to the international currencies like the American Greenback.
Hermann Escarra, a member of the National Constituent Assembly in Venezuela, indicated that the establishment is keen to make constitutional changes so that a new crypto bank will become a reality. Without the constitutional changes, it would be tough to promote a bank with a specific focus on digital currency. The crisis in the domestic circuit has worsened on a continuous basis, according to a report in bitcoinnews.com.
Among them, weak oil prices, mismanaged socialist system, corruption and experiencing a total collapse of the country’s economy, healthcare, security and public services. Interestingly, the country has introduced Petro token in February with a view to face sanctions and domestic crisis. The digital coin was supported by oil reserves that existed in the country, bitcoinnews.com reported. The inflation level is such that coffee costs approximately bolivar (VEF) 2.2 million or about US$0.50 in the black market. For the same money, citizens could fill a small SUV with petrol nearly 9,000 times.
On its part, Venezuela government is unstoppable in printing money and that too at an alarming pace. The existing inflation rate is already more than 25,000 percent while IMF expects hyperinflation to hit one million percent level before the current year ends pointing out the existing rate. However, this prediction is termed as absurd by some economists though the future is not bright enough for the South American oil-rich giant.
The recent attempt to assassinate President Maduro during the last weekend and the continued economic meltdown only presented a grim future for Venezuela. There are also enough doubts whether the proposed digital currency-based central bank could help to address the issues at hand. This included an easing of its extreme financial problems. The concerns increased mainly because petro digital coin has not made any significant impact.
At the same time, Venezuela has reached a stage where it has to think out of the box. Alternatively, there is no time to think whether a specific proposal is possible or not as the time is running out for them. Therefore, they have left with no alternatives but try out everything that is available.
The president’s new “Bolivar Soberano” is getting prepared for the launch on August 20. This is linked with the Petro token. Escarra stated that the draft changes would be presented to the board of the Constituent Assembly in 35 days. Therefore, the upcoming period is going to be very crucial for Venezuela.