Equador Planning to Roll Out its Own Digital Currency

September 26, 2014         By: Atifa Imran

Ecuador has big plans up its sleeve. It aims to be the first country to create an official digital currency issued by the government’s central bank.

This December, Ecuador plans to launch a yet unnamed digital currency that will co-exist with the recently adopted U.S. dollar.

The new electronic money is geared towards Ecuadoreans who are unable to access the traditional banking system. The currency will serve as an M-Pesa-like mobile payments catalyst, and a way for the country to regain some control over its economic system.

Though it’s a form of digital money, it would also contain some fundamental differences from bitcoin.

The production of the new currency would completely depend upon demand, and issued directly from the government, unlike bitcoin’s peer-to-peer and decentralized nature.

The analysts are of the opinion that this new currency would be an initial step towards abandoning the traditional U.S. dollar.

However, the currency use would be voluntary. This new currency would not be used to pay the state contractors or the public employees.

A lot of questions have been circulating around whether the central bank has the authority to produce such a currency.

Some analysts have also expressed their doubts regarding this new currency.

Nathalie Reinelt of Aite Group believes that making such a currency could be a big challenge in itself. There is an overall mixed opinion about whether Ecuador wants push for this digital currency as a method of abandoning the U.S. dollar a move thanks to Ecuador’s internal politics, could lead to more economic strife.