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Monday, December 4, 2017

Venezuela to try digital currency ..

The Mauryan empire founded by Chandragupta Maurya, is hailed in Indian history as a period of golden rule. The Magadhan kingdom was already large and Chandragupta expnded it further. The Seleucid emperor, Seleucos I, ceded to him all the Greek lands south of the Hindu Kush mountains. Thus his empire stretched through modern Pakistan into Afghanistan. Chandragupta is said to have given up the throne in order to become an ascetic. Emperor Ashoka was his grandson; he was overwhelmed with remorse and decided to abandon war altogether. Among their many fames, coinage is a marvel.  The Mauryan coinage consisted almost exclusively of silver karshapanas of roughly 3.4 gm, a series that continued the Magadha karshapana series.  Those coins had punches and it could not be deciphered as to what they depict or indicate ! 

Nicolás Maduro Moros is the President of Venezuela since 2013. Previously he served under President Hugo Chávez as Minister of Foreign Affairs from 2006 to 2013 and as Vice President of Venezuela from 2012 to 2013.  His rise has been phenomenal, starting off from a bus driver, to a  trade union leader, before being elected to the National Assembly in 2000. In the earlier regime he was hailed as "most capable administrator and politician of Chávez's inner circle". After Chávez's death, he rose to power in a special election.

Venezuela officially the Bolivarian Republic of Venezuela is a federal republic located on the northern coast of South America. It is bordered by Colombia, Brazil, Guyana,  Dutch Caribbean ABC islands and  the islands of Trinidad and Tobago.  The territory now known as Venezuela was colonized by Spain in 1522 amid resistance from indigenous peoples. In 1811, it became one of the first Spanish-American territories to declare independence which was not securely established until 1821, when Venezuela was a department of the federal republic of Gran Colombia. It gained full independence as a separate country in 1830. During the 19th century, Venezuela suffered political turmoil and autocracy, remaining dominated by regional caudillos (military strongmen) until the mid-20th century.  After years of turmoil, in  new constitution was written. This new constitution officially changed the name of the country to República Bolivariana de Venezuela (Bolivarian Republic of Venezuela).

The currency of Venezuela is ‘ bolívar fuerte (sign: Bs.F.’  since Jan 2008. It is subdivided into 100 céntimos and replaced the original bolivar.  The bolívar was adopted by the monetary law of 1879, replacing the short-lived venezolano at a rate of five bolívares to one venezolano. Initially, the bolívar was defined on the silver standard, equal to 4.5g fine silver, following the principles of the Latin Monetary Union. The monetary law of 1887 made the gold bolívar unlimited legal tender, and the gold standard came into full operation in 1910. Venezuela went off gold in 1930.  Until 18 February 1983 (now called Black Friday) by many Venezuelans, the bolívar had been the region's most stable and internationally accepted currency. It then fell prey to high devaluation. Exchange controls were imposed on February 5, 2003 to limit capital flight.

Now comes the news that Venezuela is creating a digital currency to combat a financial blockade by the United States, President Nicolas Maduro has announced. It will be called the Petro and be backed up by Venezuela's reserves of oil and gas and its gold and diamond holdings, the president said in his weekly television program. "This is going to allow us to move toward new forms of international financing for the country's economic and social development," the president said yesterday.

The news comes as Venezuela faces acute financing problems after creditors and ratings agencies declared the government and the state run oil firm PDVSA to be in partial default for missing interest and principle payments on bonds. Maduro blames those problems on sanctions imposed by the United States in August, barring American citizens and companies from buying any new Venezuelan government or PDVSA bonds.

Venezuela is mired in a deep economic crisis triggered mainly by a fall in crude oil prices and a drop in oil production. Petroleum is its main source of hard currency. Over the past year, the Venezuelan bolivar has plummeted 95.5 per cent against the dollar on the black market.

So whether digitalisation of currency can bring in benefits remains to be seen !

With regards – S. Sampathkumar

4th Dec 2017. 

1 comment:

  1. this would definately be a milestone in the venezuelan eceonomic marrket i know of quite a number of federal states that have adopted the use of digital currency and its working pretty well