Venezuela Set To Create New Cryptocurrency Central Bank

Venezuela is planning to reform its Constitution and one of the primary changes included will be the creation of a central bank for cryptocurrencies. This announcement was made by Hermann Escarrá, who is described as an influential member of the Venezuelan National Assembly.

Escarrá says that the inclusion of a cryptocurrency central bank is an essential part of the draft constitution.

It will have all the functions of a central bank, overseeing all exchange, monetary, and financial policy. It will also be fully incorporated.

Other parts of the constitution will include overseeing Venezuela's oil-based cryptocurrency, the “Petro” as well as the establishment of an e-court of constitutional guarantees that will stand above the Venezuelan Supreme Court.

A draft of constitutional changes is set to be presented to the Assembly in September. Other changes to the constitution have not been made clear or specific with only Escarrá's revelations about a cryptocurrency central bank being the only available information on the planned constitutional changes.

Many in the Venezuelan government see cryptocurrency as a way out of Venezuela's financial troubles, with its increasing inflation rate despite the country's vast quantity of oil. However, the launch of the Petro early this year did not fulfill the promise of increased economic activity.

Venezuela Financial Struggles Continue

However, many are still optimistic that the cryptocurrency industry will change things for the better in Venezuela. President Maduro has doubled down on the Petro recently ordering several state-owned companies to start accepting it. Additionally, it seems there are also plans to only sell oil exports as Petro-only.

The government's most notable attempt to boost the Petro was when they offered India a 30 percent discount on their purchase of oil – as long as they paid only in Petro. India refused the offer.

The main reason for the use of the Petro is that many Venezuelan officials see it as a way to bypass the international sanctions that have been placed on the country. It could also be a potential way for foreign investors to enter the country without any barriers.

However, efforts to use the Petro have been crippled by President Trump banning US citizens from using the cryptocurrency. It also hurts that the Brookings Institute, a well-respected think tank, describes the Petro as undermining the legitimacy of other cryptocurrencies.

The plan for the new constitution is to enable more foreign investment to enter the country's oil sector. This move is expected to help slow down the rampant inflation which has seen a cup of coffee which cost 2,300 bolivars a year ago skyrocket to now cost two million bolivars.