Declaring to cheers that "The 21st century has arrived!" Venezuelan President Nicolas Maduro announced Sunday that Venezuela will be introducing a digital currency called the "petro" which will be backed by oil, gas, gold and diamond reserves. The announcement has bewildered some followers of cryptocurrencies, which typically are not backed by any government or central banks.

By Lorimer Wilson, editor of munKNEE.com - " The internet's most unique site for financial articles! (Here's why)" - with edited excerpts from a Reuters article by Alexandra Ulmer and Deisy Buitrago to provide a fast & easy read. Visit our Facebook page for all the latest - and best - financial articles!

Maduro believes the "petro" will:

• help Venezuela combat a Washington-backed conspiracy to sabotage his government and end socialism in Latin America.
• help Venezuela "advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade."

The announcement highlights how sanctions enacted this year by the Trump administration against Venezuelan officials, PDVSA executives and the country's debt issuance are hurting Venezuela's ability to move money through international banks.

Maduro's government has a poor track record in monetary policy as it has refused to overhaul Venezuela's controls and stem the economic meltdown which has led to a hyper-inflationary 57% depreciation of the bolivar against the dollar in the last month alone on the widely used black market.

Maduro's pivot away from the U.S. dollar comes after the recent spectacular rise of bitcoin, which has been fueled by signs that the digital currency is slowly gaining traction in the mainstream investment world. Ironically, Venezuela's currency controls in recent years have spurred a bitcoin fad among tech-savvy Venezuelans looking to bypass controls to obtain dollars or make internet purchases.

He could now be seeking to pay bondholders and foreign creditors in the new cryptocurrency amid a plan to restructure the country's major debt burden, opposition leaders said, but the plan is likely to flop.

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