The Venezuelan government is reportedly converting pension payments into its national cryptocurrency, the Petro.
According to a Venezuelan news site, The Caracas Chronicles, pensioners received two messages on December 7 informing them that their money would be in the Petro crypto. The move was executed without consent or prior notice.
Initially, pensioners would receive a message notifying them that payment had arrived. They would then log into their account at patria.org.ve and transfer the funds to a bank of their choice. A whole day would be spent queuing at the banks awaiting withdrawal.
Now, however, the funds are in the Petro cryptocurrency and there is no way to transfer the cryptocurrency directly to the banks, because financial institutions in the country are still not equipped to handle crypto. That said, there is a way to convert the Petro to Bolivars on the Patria platform and the process is reportedly complex.
Features available on the Patria site include an option to connect the Petro and Patria wallets.
Problems Facing the Petro Crypto Since Inception
The state-backed Petro coin was launched in October and is issued by the nation’s treasury. It can be exchanged for other currencies such as the U.S. dollar, euros, and yuan and traded for other mainstream digital currencies such as Bitcoin and Ethereum.
It was developed to bypass U.S. sanctions on the country. The sanctions target the country’s leadership, which has been accused of gross violation of human rights and corruption.
The Petro coin currently faces significant problems, especially when it comes to worldwide acceptability. According to the U.S. State Department, American citizens and companies are barred from transacting with the Venezuelan government, regardless of whether transactions are carried out in fiat or digital currencies.
Russia has also openly stated that it will not deal in the Petro cryptocurrency. This is according to a recent statement issued by the country’s finance minister, Sergey Storchak. The two countries have a common agenda to overcome economic sanctions.
Other countries, such as India, have previously declined to get into agreements involving the Petro. In June, India’s foreign minister, Sushma Swaraj, stated that such an attempt would be against the country’s Central Bank policies, which restrict financial institutions from carrying out trade in digital currency.
Venezuela’s Petro and the Phenomenal Inflation Rate
Venezuela’s economy has reached a historic 833,997 percent inflation rate within 12 months. This is according to a report published by Congress in October. This puts Venezuela in first place on the list of countries with the highest inflation rates in the world. It is followed by the Democratic Republic of Congo and Malawi, which have an annual inflation rate of about 22 and 21 percent respectively.
The Venezuelan government is hoping that the Petro will shore up the nation’s troubled currency.
(Featured Image Credit: CNN)