DAVID GREENE, HOST:
In Venezuela, there has been a severe economic crisis. Hyperinflation has been a big part of the problem there. Prices skyrocket, and then people can't afford food or medicine. President Nicolas Maduro has proposed a solution here. It is a state-sponsored cryptocurrency - right? - like bitcoin, but this currency is called the petro. Here's reporter John Otis.
JOHN OTIS: The Venezuelan government is today launching the petro, its new cryptocurrency. President Maduro says that each petro will be backed by one barrel of oil from the petroleum-rich nation and that about $6 billion worth of petro tokens will eventually be issued.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT NICOLAS MADURO: (Foreign language spoken).
OTIS: In a speech, Maduro declared, "Venezuela is the first country to create a digital currency based on natural resources. We are in the vanguard."
But critics call the petro a scam. For one thing, the barrels of oil that back the petro have yet to be pumped out of the ground, so says Caracas analyst Jean Paul Leidenz.
JEAN PAUL LEIDENZ: In terms of international investors, I mean, there are huge risks because these are barrels that are not being developed at all. I mean, there are not even plans or a project of a future joint venture exploiting these barrels.
OTIS: In addition, the petro amounts to borrowing against the country's oil reserves, a move that by law must be approved by the Venezuelan congress. However, congress is controlled by the opposition, and Maduro ignores it. Venezuelan economist Jose Gil is an expert in digital currencies.
JOSE GIL: (Foreign language spoken).
OTIS: "Who's going to buy the petro?" he asks. "It has no legal backing." Gil calls the petro an emergency plan for the Maduro government to raise hard cash and make payments to foreign suppliers. Many of those dollar transactions have been blocked by U.S. financial sanctions designed to punish Maduro's increasingly authoritarian regime. But last month, the U.S. Treasury Department warned that investing in the petro could violate these sanctions. Another challenge is that the creation of a state-sponsored digital currency requires government transparency and public trust in the country's leaders. But according to critics, these factors are notably lacking in Venezuela. For NPR News, I'm John Otis.
(SOUNDBITE OF BONOBO SONG, "KERALA")
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.