Ecuador heralds 'digital currency' plans

[Zorro]

Source: AP

Ecuador is planning to create the world's first government-issued digital currency, which some analysts believe could be a first step toward abandoning the country's existing currency, the U.S. dollar, which the government cannot control.

The virtual currency, which Central Bank officials say they expect will start circulating in December, does not yet have a name. Officials would not disclose technical details of the strictly digital currency, which they said would not be like Bitcoin. The amount of the new currency created would depend on demand.

Deputy director Gustavo Solorzano said it is to exist in tandem with the greenback and, by law, be backed by "liquid assets." It would be geared toward the 2.8 million Ecuadoreans — 40 percent of participants in the economy — too poor to afford traditional banking, officials say.

They will initially be able to use it to make and receive payments using their cellphones, said Solorzano, at minimal cost. Such mobile payments schemes are already popular in African nations including Kenya and Tanzania, where they are privately run.

Read more: http://news.yahoo.com/ecuador-heralds-digital-currency-plans-040307144.html

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Oh yeah this sounds like a winning idea...

[Warpy]

1. It is probably going to be a flop among the people it is supposed to help

because they'll have to rent cell phone time in order to spend what little they have, incurring another charge in the process.

Plus, there are always hackers who think they are owed other people's funds.

Still, it's nice that they're thinking about what they can do for the bottom, mostly rural and indigenous people.

[reorg]

2. Most people in third world countries have cell phones

Ecuador: 78.8% own cellphones, 8.4% have a smartphone

The mobile line penetration in Ecuador is 108%, with 8.4% of people in the country having a smartphone, according to a report by the Ecuadorian Minister of Telecommunications and Information (MINTEL).

The report, based on a survey of nearly 22,000 households in December, 78.8% of households own cellphones, which is 8.9 points higher than recorded in 2008. ...

http://www.rcrwireless.com/20120217/carriers/ecuador-78-8-own-cellphones-8-4-have-a-smartphone-2

[Warpy]

3. One in five don't have them and those are the people who will need to pay

someone who does have one a fee to access their money to pay a bill or buy seed or meat animals or whatever they need in poor rural areas.

The poor in Ecuador are very, very poor.

Again, I do give them props for thinking of things that could help. I just don't think this is the right thing.

[Adrahil]

6. That seems like a significant chunk of people to not have access NT

[blkmusclmachine]

4. A great way to track citizen's personal business transactions.

Big Brother is watching

and listening

and reading

and saving

...

[Judi Lynn]

5. Ecuador Turning to Virtual Currency After Oil Loans

Ecuador Turning to Virtual Currency After Oil Loans
By Nathan Gill
Aug 11, 2014 5:12 PM CT

(Corrects headline to remove reference to dollar saving in story originally published Aug. 5. Attributes speculation that government would use the new currency to pay bills in first paragraph. Clarifies in third paragraph that people can reject government payments in the new currency and adds government’s explanation of its advantages in seventh paragraph.)

After mortgaging most of Ecuador’s oil and gold to finance spending, President Rafael Correa is planning to create a virtual currency that financial professionals say his government could use to pay bills.

Congress last month approved legislation to start a digital currency for use alongside the U.S. dollar, the official tender in Ecuador. Once signed into law, the country will begin using the as-yet-unnamed currency as soon as October. A monetary authority will be established to regulate the money, which will be backed by “liquid assets.”

Less than six years after repudiating $3.2 billion of its dollar-denominated debt, Ecuador has dwindling oil reserves, with current-account deficits that are draining dollars from the economy and financing needs at a record. While Ecuador hasn’t said it plans to use the currency to fund spending and the legislation states that people can refuse to accept it as payment, Landesbank Berlin Investments says Correa may seek to use it to compensate workers and contractors and conserve hard cash.

More:
http://www.bloomberg.com/news/2014-08-11/ecuador-turning-to-virtual-currency-after-oil-loans-correct-.html