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Venezuela's Nicolas Maduro announces 'petro' cryptocurrency pegged to oil and gold

The Venezuelan president has announced plans to create a cryptocurrency backed by oil, gas, gold and diamond reserves. He said the "petro" will help combat the US' "blockade" against the oil-rich country.

Venezuelan President Nicolas Maduro has announced that his government will launch a cryptocurrency in a bid to combat a "blockade" from the US.

"This is going to allow us to move toward new forms of international financing for the country's economic and social development," Maduro said in his regular Sunday televised broadcast.

Read more: Cryptocurrency market keeps investors obsessed

The president said a team of 50 people specializing in technology, economics, finance and monetary policy will be established to determine how move forward on the cryptocurrency, which he said will be called "petro."

According to Maduro's announcement, the blockchain technology behind Venezuela's cryptocurrency will receive institutional, political and legal legitimacy from the Ministry of University Education, Science and Technology.

However, the cryptocurrency will be "backed by wealth reserves of Venezuelan gold, oil, gas and diamonds."

Opposition leaders have derided the announcement, which they said needed congressional approval.

Viable solution?

Maduro's government has struggled to pull the country out of an economic downturn following the collapse of oil prices across the globe. Meanwhile, US sanctions have made it extremely difficult for the country to operate in international credit markets and shore up foreign currency.

Read more: Could there be a Venezuelan refugee crisis?

The announcement of the "petro" comes amid rising interest into blockchain technology and cryptocurrencies, such as bitcoin.

Bitcoin has shot up in value from roughly $700 (590 euros) in January to more than $11,000 this month. However, central banks in Europe and the US have warned of the possible long-term risks the cryptocurrency poses to financial markets.

ls/cmk (Reuters, AFP)

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