2017.12.0408:05:00UTC+00Venezuela To Launch Oil-backed Cryptocurrency 'Petro'

Venezuela's President Nicolas Maduro announced on Sunday that his government will introduce a cryptocurrency called "Petro" to help the country overcome the financial sanctions imposed by the U.S. and other countries.

Maduro made the announcement in his weekly televised broadcast and said the digital currency would be backed by the country's gold, oil and gas reserves.

The government will also establish a "Blockchain Observatory" to extend institutional, political and legal basis for the planned digital currency, he added.

The president said the digital currency would strengthen the monetary sovereignty and economic independence of the country and help it to overcome financial blockades in international markets.

Maduro's announcement comes as the popular digital currency Bitcoin set new highs in recent weeks, garnering massive interest across the world amid speculation that it is gaining wide acceptance and may soon be treated as a valid asset by mainstream investors.

Meanwhile, warnings from market experts, policymakers and economists that bitcoin is another bubble waiting to burst have multiplied in tandem with the surge in the digital currency.

The Venezuelan president's move also reflect the troubles that his country is facing in raising funds in the international markets, thanks to sanctions imposed by the U.S. and European Union on individuals and public sector officials.

Bitcoin has gained favor among many Venezuelans who use it to overcome government controls to secure US dollars and for internet shopping. Cryptocurrencies are not backed by any central bank or government.

Opposition politicians and observers reportedly were weary of Maduro's latest announcement given the government's poor track-record on economic reform and policy.