Dagong Global Credit Rating, one of China’s biggest credit rating agencies, recently published a report commenting on Venezuela’s oil-backed cryptocurrency, the Petro (PTR). Per the report, the cryptocurrency “may help the global currency system return to its basic value.”
While the agency doesn’t assert whether the Petro can help Venezuela’s economy, it points out the issuance of an oil-backed cryptocurrency is significant as it differentiates it from other cryptocurrencies like bitcoin that aren’t backed by any assets.
Venezuela’s effort, the agency wrote, can “generate useful lessons on how defects of the international currency system can be mended so that the system can return to its basic value.” Being backed by the country’s oil reserves means the Petro is protected from speculation and volatility, Dagong reports.
The report further points out that since the collapse of the Bretton Woods system, the international currency system has been dominated by the US dollar. The currency’s credit foundation, Dagong continues, has been weakened by the country’s “issuance of currency in excess of its wealth creation ability.”