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.

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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.

Venezuela on the brink The last straw In March 2017, violent protests erupted across the country in response to a Supreme Court decision to strip the legislative branch of its powers. Amid an international outcry, President Nicolas Maduro reversed the decision, but it was too late. Thousands continued to take to the streets, calling for new elections. More than 100 people were killed in clashes with security forces.

Venezuela on the brink Hunger, a growing problem The violence added to the ongoing economic and political crisis in Venezuela. Many Venezuelans spend more than 30 hours a week waiting in lines to shop, and are often confronted with empty shelves when they finally enter a store. President Maduro blames the crisis on US price speculation. The opposition, however, accuses the Socialist government of economic mismanagement.

Venezuela on the brink Health care in crisis The crisis has even affected health care in the oil-rich nation. Venezuelans often head to Colombia to collect medical supplies to send home, as seen in this picture. Hospitals across Venezuela have compared conditions to those seen only in war zones. As patient deaths rise, health officials have sounded the alarm on the rise of malaria and dengue fever.

Venezuela on the brink Power grab By July 2017, Venezuela's pro-government Constituent Assembly was established. For observers, it had all the hallmarks of a power grab. The new body adopted the authority to pass legislation on a range of issues, effectively taking away the powers of Venezuela's elected congress, which was under the opposition's control. The move drew wide international condemnation.

Venezuela on the brink The West sanctions In response to the political crisis, the United States and European Union imposed a series of sanctions against ruling officials. The US blacklisted members of the Constituent Assembly and froze all of Maduro's assets that are subject to US jurisdiction. The EU banned arms sales to the country.

Venezuela on the brink Government victorious in regional elections In October 2017, Venezuela held two votes: regional elections and elections for governors, which were long overdue. The opposition boycotted the vote, but then split, as some candidates and small parties chose to participate. This caused a deep rift within Maduro's opponents. The government went on to sweep the vote, which detractors say was unfair and heavily favored the regime.

Venezuela on the brink Debt default In November 2017, the oil-rich, cash-poor nation faced its day of reckoning. Credit ratings agencies declared Venezuela and its state-run oil company in "selective default." But Russia offered to restructure the South American country's debt to ensure Caracas pays its other creditors. US and EU sanctions, however, limited the chance of an agreement.

Venezuela on the brink Presidential elections scheduled The National Assembly announced in January 2018 that it would grant Maduro's call for snap presidential elections. The electoral authority, CNE, held the elections on May 20. The EU, the US and 14 Latin American nations warned that they would not recognize the results. The mainstream MUD opposition alliance boycotted the vote, leaving only one possible outcome.

Venezuela on the brink Maduro wins ... Maduro was re-elected to a second six-year term with about 68 percent of the vote. Turnout was only 46 percent, according to electoral authorities. However, the MUD opposition alliance put turnout at less than 30 percent. The Organization of American States (OAS) called the elections neither free nor fair.

Venezuela on the brink ... Guaido assumes power But weeks into the new year, the situation took a drastic turn. On January 23, 2019, parliament president Juan Guaido declared himself interim president of Venezuela — a move that was quickly recognized by US President Donald Trump. Maduro called it a US-backed "coup." Days later, the US sanctioned Venezuela's state oil firm, while Guaido staked his claim on the country's foreign assets.



ls/cmk (Reuters, AFP)