Venezuelan President Nicolas Maduro pitched about his proposal to launch its own government-backed cryptocurrency, “Petro” for its oil reserve to get the country out of the situation of economic crisis. He announced that each unit of petro would be equivalent to one barrel of oil. This was a brave move, some lauded it and some criticized. However, Maduro announced that Petro would have a “great impact” on how his country accesses a foreign currency and obtains goods and services from across the globe. This was a clear reference to the Venezuela’s foreign currency shortage, which resulted out of the sanctions imposed by the US.
The initial round of the presale, which accounts for 40 percent of the Petro tokens, was focused majorly on institutional investors. Many are betting on the success of this currency, however there is no assurance for it. As planned by Maduro there has still been no mechanism to exchange cryptocurrency for crude or other hard assets and most of the parliament of the country is filled with oppositions, who have declared the currency as illegal.
There have been reports that Russia’s central bank have premeditated to talk about developing a supra-cryptocurrency to countries including Brazil, China, India and five other Soviet Republics. Even People’s Bank of China Deputy Governor Fan Yifei recently wrote an article mentioning the probability of a virtual currency that it may issue with Chinese commercial institutions. There are also countries like Sweden, where usage of cash is disappearing and the central bank is scrutinizing the possibility of the issuance its own digital currency, the E-krona. The currency bred out of trepidation that elongated use of other virtual currencies managed by private groups could harm competitiveness.
Yes, it was till now defined as something out of the control of governments but Bitcoin and its cousins and competitors who have developed freely from central authority and all those who intentionally originated with this thought have been successful in doing it some limit. However, the technology that underpins these systems called blockchain technology doesn’t exclude centralization. As a concept a government could have better control of a digital currency than a fiat currency, as it would be able to maintain label on all transactions recorded on the blockchain ledger.
Much like “Petro” in Venezuela, the results are unknown toe the best of knowledge. But here is what we can predict; regulating the money supply by modifying the interest rates, which means monetary policy, could be altered for the benefit. If we evaluate this situation then more direct changes in monetary schemes would lead to more effective and cost efficient economy. Governments could diminish the tax evasion rates, and as a result transactions could be traceable. Additionally, for the similar rationale Bitcoin is widely admired among people who are searching to avoid government control of currency, starting a virtual currency might seem attractive to any government that doesn’t reckon how it might be treated by the international financial system. That includes governments facing international sanctions.