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Aug. 20 (UPI) -- Venezuela introduced a new currency, backed by a cryptocurrency, Monday in an effort to combat the country's hyperinflation. The country issued new sovereign bolivar bank notes, which cut five zeroes from the end of the former bolivar currency and decreased its value by 95 percent.
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Venezuela declared a bank holiday on Monday, keeping financial institutions closed as the new currency was released.
The sovereign bolivar is worth 100,000 bolivars and will be backed by a cryptocurrency called Petro.
Venezuelan President Nicolas Maduro announced the Petro cryptocurrency in December, stating it would be backed by Venezuela's gold, oil, gas and diamond reserves.
The government set the Petro's value at $60, or 3,600 sovereign bolivars and its price will fluctuate to be used to set prices for goods, according to Bloomberg.
Francisco Rodriguez, chief economist of Torino Capital, wrote a note to investors stating Petro doesn't trade on any functioning market.
On Friday, Maduro announced Venezuela's minimum wage will be set at 1,800 sovereign bolivars, a 3,300 percent increase over the previous figure.
He also said the government would help small- and medium-sized industries with costs of the wage differential for 90 days.
Venezuela's main business chamber, Fedecamaras, issued a statement saying private businesses are "in serious risk of bankruptcy due to the way in which the measures are being implemented," adding Maduro's announcements were not properly communicated to the people.
The release of the new currency was met with confusion as some ATM's dispensed the new bills, while others were empty and customers asked shop owners to calculate the difference between the old and new currencies.
Rodriguez noted that Maduro's plan to combat the hyperinflation was "marked by inconsistencies and was short on specifics, suggesting that any attempt to stabilize the economy would start out facing huge credibility problems."
