According to data quoted by the US financial website ZeroHedge on September 19, by August 2021, the oil production of Venezuela fell continuously to 520,000 barrels per day, far below the country’s set of 1.5 million barrels. Target. There is no doubt that Venezuela is presenting a spectacle in global economic history. Although it has a huge oil wealth of about 304 billion barrels, according to the latest regional economic outlook report of the IMF in September, the country’s per capita GDP has fallen in the past decade 87%, from 12,200 U.S. dollars in 2011 to 1,540 U.S. dollars per year.
A corner of Caracas, Venezuela 2
Data show that the oil industry accounts for more than 25% of the country’s total economy, accounting for about 99% of total exports, and it is also proud of the textile industry. It produces chemicals, cement, steel, aluminum, cocoa, coffee and rice, but most of these industries have been destroyed in the past 20 years. At least since the oil price plummet in 2014, coupled with the US financial sanctions, The country’s economy and oil industry have been in a long-term crisis. These external factors have seriously affected Venezuela’s economic life.
Venezuelan oil production has dropped to an average of 330,000 barrels per day
For example, Venezuelans reported that they lost an average of 24 kg in 2017. As the new crown variant virus continues to spread and oil demand is sluggish, this will have a serious impact on the fiscal revenue and foreign exchange markets of Iran and Venezuela, which mainly rely on oil.
For example, according to a report by Reuters on August 24, due to the economic sanctions imposed by the United States, Venezuela has signed an agreement with a little-known local company. Agreement to replace crude oil with food. According to the agreement, starting in December last year,The state-owned oil company PDVSA delivered more than 6 million barrels of crude oil worth nearly US$260 million to a company called Supraquimic CA, which will provide food for government programs.
For example, according to the Iranian Minister of Petroleum a week ago, although Iran was able to continue to export oil through other innovative means, the country’s oil exports still fell to the lowest value in decades. As of August, exports decreased. 85% to 13 billion U.S. dollars, in the past it could reach 100 billion U.S. dollars each year.
Iranian city Tehran
In such a severe environment, Iran and Venezuela, the two major oil producing countries, are seeking economic reforms and finding another way out for oil exports. The current news seems to indicate The economies of these two countries have begun to improve and will jump from the poor to the rich. In particular, Venezuela's economy will usher in a bottoming out.
According to a FT report a week ago, some economists believe that the Venezuelan authorities’ decision to relax foreign exchange controls, import restrictions, and encourage informal dollarization has breathed life into an economy that has shrunk by about 75% since 2013. People Now you can buy groceries, daily necessities, and other commodities that have been unavailable for nearly a decade. In addition, there is also new news that the US authorities may relax financial sanctions, which in turn will promote a further rebound in the country’s economy. Credit Suisse predicts that Venezuela's economy will grow by 4% in 2021, which will be the first year of growth since 2013.
According to a source quoted by Bloomberg a week ago, Venezuela will officially launch a digital currency from October this year to simplify daily transactions. The digital bolivar will remove six zeros from the bolivar ( All numbers will be divided by one million), which means that one U.S. dollar can be exchanged for 3.2 bolivars instead of the current 3219,000. We noticed that since 2008, Venezuela has removed 8 zeros from the currency,Because hyperinflation destroyed people's savings.
At the same time, according to a follow-up report by the Venezuelan newspaper a week ago, the Venezuelan authorities have ordered the start of the official sale of oil on the international market with (Petro). According to the country’s agreement, each unit of petrocoins is linked to the price of a barrel of oil, and some contracts have been signed to become an alternative financial means to the U.S. dollar. This also means that through the issuance of petrocoins, we hope to quickly change from poor to rich. And out of economic difficulties, and become the first country to settle commodities with cryptocurrency. And just after Venezuela, new news shows that Iran will also use crude oil, gold and other resources as physical collateral to issue encrypted digital currencies, and hope that petrocoins can break the U.S. dollar blockade.
Currently Iran is negotiating with Germany, Switzerland, France, the United Kingdom and Russia to carry out digital currency transactions. At the same time, Iran specifically proposes to establish a cryptocurrency-related payment system among Gulf countries , In order to reduce dependence on the US dollar. At this critical moment, many more countries have unexpectedly announced that they will follow the example of cryptocurrencies to achieve the goal of de-dollarization.
According to Reuters a week ago, several Japanese banking giants intend to set up a committee for digital currencies and establish a financial network similar to SWIFT that can be used for cryptocurrency payments, and it can be used in cooperation with Iran. Many countries in China have achieved decentralization in commodities and other fields. Data shows that Japan is Iran’s main oil buyer in Asia. In addition, Bloomberg further stated that the Riksbank also announced in March that it would use digital cryptocurrencies pegged to the local currency to support financial settlements, and blockchain technology to decentralize the U.S. dollar. Just a week ago, the Central Bank of Brazil also revealed that it is advancing digital Cryptocurrency project, used for foreign exchange transactions.
The latest development is,According to a news released by Reuters, citing El Salvador authorities a week ago, the country has used encrypted digital currency to become legal tender to replace some of the functions of the U.S. dollar, in order to achieve economic separation from U.S. dollars and realize the economy from poor to rich, which also means As El Salvador became the first country to adopt cryptocurrency as its legal tender, according to Reuters a week ago, the country had purchased more than 400 bitcoins. The Salvadoran authorities said this would help attract investment and stimulate domestic demand. Residents of this country can use cryptocurrency to pay through electronic wallets. In order to simplify the exchange process, the authorities have set up a special fund of US$150 million.
Just after El Salvador, two more countries followed up and announced the legalization of virtual currencies such as encrypted digital currencies. According to a report by the Lao Times on September 15th, Laos has approved a pilot plan, and the plan agreed In the country, six companies are experimenting with cryptocurrency transactions. According to a Ukrainian media report on September 12, the Ukrainian authorities passed the Virtual Assets Act and that cryptocurrencies were officially legalized in the country to achieve decentralization of the U.S. dollar. , But unlike El Salvador, Ukraine stipulates that encrypted virtual currency cannot be used as a means of payment.
In this regard, senior economist Jim Rickards also said last week that the world needs a new cross-border settlement currency independent of a certain country. Due to the extremely low interest rate policy of the US dollar, the US dollar dominates. Oil-producing countries like Iran and Venezuela have brought many problems, and the logic behind this is also very simple.
According to the explanation of JP Morgan Chase , the U.S. economy and monetary measures are becoming a catalyst for long-term decentralization of the U.S. dollar. The U.S. dollar can no longer become the normal world currency. Statistics and statistics show that since the spread of the new crown virus in March 2020, the United States has released a total of 31 trillion dollar liquidity and a package of economic stimulus packages in just 67 weeks.In other words, the United States is monetizing these huge debts.
In this regard, the chairman of First Mining Gold stated that with the increase in U.S. debt and the rise of inflation, the phenomenon of currency reset in the financial and currency markets is expected to occur, which may be related to gold. The linkage of digital currencies supported by other strategic resources is also in line with the current trend. This may bring about the biggest changes in the international monetary and financial system after the breakup of the Bretton Woods system and the decoupling of the U.S. dollar from gold.
In other words, it is the US dollar's abuse of currency dominance that prompted the global market to find alternatives. Jim Rickards further stated that it is clear that once the global economy stabilizes, it will weaken the role and value of the US dollar. As a new measure to deal with US economic sanctions, Iran has officially replaced the U.S. dollar with the renminbi and is listed as one of the country’s main foreign exchange currencies. The Iranian cabinet passed a resolution a few weeks ago and decided to cut the local currency by four rials. Zero, officially changed to the country’s new currency, Turman, and other news indicates that Turman will anchor the RMB exchange rate. Experts from the IRAN national think tank said that this move may prove to be successful. It is Iran’s efforts to improve economic indicators and keep fiscal revenue away. Part of a series of innovative economic measures taken by the petroleum industry.
The foreign exchange system of the Central Bank of Iran replaced the U.S. dollar with RMB
Then, according to a follow-up report by the Russian media RT on September 18, it now includes the United Kingdom, Russia, Austria, Germany, Sweden, Switzerland, South Africa, France, , Herzegovina and Bosnia have all expressed interest in this, and have negotiated with Iran on the use of cryptocurrencies in commercial and financial transactions. In these contexts, something unexpected happened to the market.
According to a Reuters report on September 19,The U.S. Treasury Department and the financial industry are discussing the impact and risks of encrypted digital currencies on the U.S. dollar. The U.S. financial regulator has indicated that it is working hard to understand the risks that cryptocurrency brings to the U.S. traditional financial system, and plans to release some reports in the next few months. According to some new reports cited by the U.S. financial website ZeroHedge, the U.S. authorities even It may lead to more radical sanctions restricting the digital cryptocurrency policies that are being promoted by countries such as Iran and Venezuela. This may also mean that Iran and Venezuela's use of encrypted digital currencies to decentralize the U.S. dollar may face a setback. (End)
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