Ecuador Pushes Forward on Upcoming Electronic Currency System
The government of Ecuador is pushing forward to establish its national electronic currency, PanAm Post reports. The central bank has given 360 days to all financial institutions in Ecuador to get on board. Top financial institutions with assets of more than $1 billion USD will have only 120 days to comply.
Ecuador’s official Resolution 064-2015-M, announced on May 25, states that all entities of the public, private, and cooperative financial sectors must join the government-run Electronic Currency System as “Macro Agents.” Financial institutions will have to provide an electronic tender option for all the services they currently offer and those they will subsequently offer. The text of the resolution (in Spanish) is available online on the government’s website.
The new resolution comes less than one year after the government asked Congress to approve the creation of the new currency, with the condition that its adoption should be voluntary, El Diario Financiero reports. Though President Rafael Correa criticized the use of the U.S. dollar in the country, because it limits the ability of the government to incentivize falling exportations, he said his administration is not planning to stop using the U.S. dollar.
“The new institutional vision of the central bank considers financial inclusion and the modernization of payment systems as strategic objectives.” states the resolution, which was approved on April 16 but officially published last week. The new electronic currency “seeks efficiency in payment systems to promote and contribute to the economic stability of the country.”
Falling oil prices – oil exportations account for 25 percent is the country’s income – and the rising exchange value of the U.S. dollar due to the recovering U.S. economy have caused a liquidity crisis in Ecuador.
The new electronic currency isn’t related to bitcoin. The U.S. dollar has been the only official legal tender in Ecuador for the past 15 years. Alternative currencies such as bitcoin are banned. The citizens of Ecuador who want to invest in bitcoin or other digital currencies can do so only outside of Ecuadorian territory. Not surprisingly, the strong opposition of the government of Ecuador is motivated by the fact that bitcoin has no regulating or supervisory body.
Bitcoin users in Ecuador criticize the government’s Electronic Currency System because it eliminates privacy from all financial transactions.
“With the electronic currency all transactions are linked to your identity, something which doesn’t happen with physical money, so it seems like a de facto acquired right is being progressively lost,” bitcoin advocate Luis Nuñez told the PanAm Post. “Bitcoin has a decentralized model that has clear rules: It’s transparent and public, it promotes freedom, and it’s adopted freely; the other is a centralized model that seeks to control information, and in which the rules conform to the political vision of the day.”
Other governments are warming up to the idea of digital currencies controlled by the state – of course, with the privacy aspect taken out. There are rumors of “Fedcoin” in the United States and some kind of “Eurocoin” in Europe. Greece’s Finance Minister Yanis Varoufakis wrote a blog post in February proposing a cryptocurrency dubbed Future Tax Coin (FT-Coin).